In the past few years, many small business owners may have been frustrated with their inability to obtain financing from many financial institutions, regardless of size. However, those problems may now be easing, as this type of credit is now seemingly slightly less difficult to obtain.
Nationwide, the availability of small business credit [was?} constricted by some 27 percent from June 2008 to the same month five years later, but now some of the largest financial institutions in the U.S. (Bank of America, JPMorgan, Wells Fargo, and 10 others) say that they've put a lot more effort into expanding this type of lending in the past two years, according to a report from Bloomberg Businessweek. Since September 2011, they claim they've boosted small business lending by some $17 billion, moving the industry back to about 85 percent of their previously stated goal of reaching $20 billion by 2014. However, how this "increase" was defined was not spelled out by the lenders.
The latest data from the Federal Deposit Insurance Corp. shows that there was about $297 billion in small business loans outstanding through the end of June, the report said. However, each bank may define "small business" differently – some broader than others – and thus the figure may mean different things to companies of different sizes. Many owners have been unable to get credit at all, even despite the Obama Administration's support of the Small Business Jobs Act, which included massive amounts in financing for independent companies who otherwise may not be able to receive it from larger lenders. In all, some 4,600 companies in 47 states received $1.9 billion through the law's State Small Business Credit Initiative, including $807 million in subsidies and $472 million in state venture capital programs. Further, 42 percent of funds obtained through the SSBCI went to ventures in areas with low and moderate median incomes.
Owners who, despite these expansions of available funds in recent months, have been unable to obtain financing may want to consider ways in which they can increase their financial flexibility through other means, including finding more affordable small business insurance. Cutting costs for workers' compensation or general liability insurance may go a long way to freeing up funds that may be better devoted elsewhere, and can consequently serve to help companies grow more easily going forward.