Over the past few years, it has been very difficult for small business owners across the country to obtain funding from traditional financial institutions. And while this issue has loosened up somewhat more recently – thanks in large part to the improving economy easing fears of delinquency and default – the fact remains that many entrepreneurs may still find the process difficult.
Those in the banking industry, for their part, say that credit restrictions for small business loans are certainly easing these days, but the fact of the matter is that much of the recovery seen in the last few years still hasn’t brought the economy back to pre-recession levels, according to a report from the Asheville Citizen-Times. Consequently, even small businesses that might be qualified to obtain a loan just a few years ago continue to struggle to get approval, and that often leads to significant frustration on the part of owners.
“Lending for commercial and industrial under $1 million is down about 17 percent from the peak of mid-2008,” Ann Marie Wiersch, a senior policy analyst in the Community Development Department at the Federal Reserve Bank of Cleveland, told the newspaper. “That’s real significant. We’re nowhere near covering all the ground we lost. [However, difficulty in obtaining credit] hurts small businesses. Small businesses haven’t seen enough improvement in their own situations to qualify for loans. They get discouraged, so they don’t apply.”
Slow progress isn’t no progress
It should be noted that the type of lending in question here is up 3 percent this year, and companies generally just haven’t sought it out, the report said. As a result, there may be more work that needs to be done in terms of making consumers aware of their options, and bringing them back into the fold after what must have been some rather difficult years when they might have wanted to expand but couldn’t get the funding to do so. On the other end of the spectrum, banks have to reach out to small business owners to let them know that their chances of getting approved have significantly increased, even if they may not believe that to be the case.
Owners who want to make their companies as attractive to lenders as possible might want to consider the ways in which they can cut costs. That could include finding more affordable small business insurance coverage – including policies for commercial insurance – to potentially save thousands annually.