Major Lender Has High Hopes for Small Business Credit

Over the past several years, many small business owners across the country have likely learned the hard way that major lenders just haven’t been all that willing to extend them financing. However, that trend has started to reverse itself in the last few months, and some within the industry think it could take off even more going forward.

While lending conditions remain tight in comparison with historical norms, it seems that many financial institutions may be warming to the idea that extending such assistance might not be as risky an investment as it could have been as recently as the start of the year, according to a report from the Associated Press. In fact, Keri Gohman, the head of small business banking at Capital One, believes that while there’s still a lot of trepidation that independent companies can push their numbers higher relatively quickly, owners have certainly done a lot to improve their standings overall, and that might make for a much safer lending environment going forward.

“We spend time talking to owners about whether now is the time is appropriate, whether it’s something that might be appropriate down the road and how to prepare for it,” Gohman told the news organization. “Or how to structure a loan. It’s in our best interest to partner with small businesses to make sure they are making well-informed choices. We continue to have very high standards when it comes to underwriting and we’re seeing small business owners really thoughtful. They don’t want to be overextended either.”

Loan process can still be tricky
The recession also taught many small business owners that they can rely on themselves a little more, and many might therefore only reach out to lenders when they feel borrowing is absolutely necessary, the report said. But even in those cases, it’s still possible that they might have their applications turned down by traditional lenders. In those cases, it seems a growing number of institutions are trying to help companies in other ways, such as by directing them toward the kind of lending available through the U.S. Small Business Administration.

Owners who want to make sure their companies are as attractive as possible to lenders might do well to consider ways in which they can cut their ongoing costs. That could include finding more affordable small business insurance policies – such as liability insurance – as a means of reducing expenses and making companies more streamlined.