Starting and expanding business during economic crunch can be quite daunting. But in these very times young entrepreneurs are source of innovation and long-term growth. For these innovative leaders lack of experience and finances becomes quite discouraging in their small business journey. The drastic slump in economy, due to recession, ceased access to business cash loans and funding for many entrepreneurs.
According to a 2011 report issued by SBA, “American economy saw a staggering drop of $652 billion in 2010 from $712 billion in business loans which were provided to entrepreneurs and small business owners.”
“To clean up the financial hindrance occurring for many businesses, in 2011, Small Business Jobs Act was passed through rigorous government initiatives in order to encourage these new business owners. As reported by Capital One Bank, 85% of U.S. small business owners were finally able to get hold of the finances they needed in their small businesses.”
But the recession did leave its mark behind leaving entrepreneurs and small business owners quite strained due to the decimated collaterals. If one owns a strong small business and number of collaterals, banks will fight to find the right funding for you, but without collaterals traditional or SBA loans no longer remain an option.
In order to help young entrepreneurs our experts have summed up a list of type of lenders who will help small business owners take their entrepreneurship to the next level.
Merchant Cash Advance
Without all the hassle associated with traditional business loan, private lenders such as Merchant Advisors have helped small businesses and young entrepreneurs succeed by providing small business funding on fast and easy terms.
As they do not offer any packaged deals it is advisable for small business owners to note that the terms of a private loan will vary case to case depending on what your loan officer has to offer. Private cash lenders often customize a plan for your small business that gets you the funding you need at an affordable price.
Excellent aspect about them is that they do not ask you to pay back in urgency. With these small business loans program the lender can take their time by giving smaller payments.
Small Business Administration (SBA)
Small Business Administration (SBA) has proved to be another suitable program for small businesses offering long term capital financing for a small business.
“With the Small Business Jobs Act upping the guaranty against default to 90% and also raising the maximum loan amount to $5 million, the 7(a) loan was revamped to make banks want to lend to small businesses and to entice small business owners to actually apply for the loan.” (Source: Inc)
Big banks = Big Terms and conditions
Small Banks= Flexible terms and conditions
When it comes to acquiring small business loans from banks, size does matter because the bigger the bank the greater the chances of being rejected. The minute you enter, the bank decides whether to lend you cash or not. But they drag you for months until they decline your application.
“So before going for your small business loan, review all your options before getting rejected. Check the bank’s Texas ratio—a formula that measures the health of a bank based on its credit troubles. If a bank has a score of more than 150%, they might already be suspending most lending activities. Also check FDIC.gov to determine if a bank is under any kind of consent order, which may indicate extra regulatory supervision and financial weakness.”
It is always better to survey in advance, rather than getting rejected later. You will always know what suits you best or otherwise if you have any doubts you can always contact merchant advisors who will guide you through the entire process of acquiring and customizing your small business loans.