Small business loans are a critical aspect of getting access to critical financing for a variety of functions, including covering overhead, buying new equipment, and funding marketing or other growth aspects. However, many small businesses struggle to find a way to access that funding for a variety of reasons.
In fact, approximately 80% of small business owners who apply for a bank loan get rejected. While the 2008 recession played a part, high transaction costs and demands for more capital to be held against business loans have also negatively impacted small business lending, as costs continue to rise for this type of financing.
Banks have moved away from being community-focused and have become Fed-focused. That means the funding for small businesses is not a high priority. As a small business owner, it can be a real concern. You may be wondering if financing will be available for your business when you need it. Here are a few key things to keep in mind as 2019 moves forward.
Big Banks Are Coming Back Into the Market
While it is true that big banks have shied away from small business loans, in April 2018, more than one quarter of small business funding requests were granted. This news is good for small businesses, simply because big banks typically offer the lowest interest rates, as well as very competitive term lengths.
Small Banks Are Still In the Market
On the other hand, small banks have remained in the small business lending market and many are finding ways to increase their market share. This process includes offering SBA loans, which are a way for lenders to mitigate their risk. This option works well for new businesses with limited credit history and for entrepreneurs just starting out.
Options for Funding
With the current financing environment, small businesses are also reaching out to alternative lending sources to address their financing needs. There is also a correlation between the ability of a small business to access financing and their ability to hire employees. Working capital loans, such as the ones offered by Formula Funding, are an affordable option to meet cash flow needs, while providing funding quickly versus a traditional bank.
If you are looking for financing for the next step in the growth of your business, then contact us today to determine your options. Our team is here to help you!
Combining a high level of personalized service with a cutting-edge lending platform, Formula Funding delivers an unparalleled banking alternative. We offer a fast and efficient option to get your business the critical funding it needs without the red tape. We work with all credit grades, tax liens, judgments, and charge-offs – something unheard of at a traditional bank. Since 2010 over 15,000 small business owners have used our funding sources to grow and expand.