While many small businesses are now feeling better about the state of the economy in general and therefore might be looking into ways they can expand their reaches, many are having difficulty obtaining the necessary financing from lenders.
Nearly half of small businesses in New York, New Jersey and Connecticut say that they have been unable to grow their businesses because they cannot obtain funding from lenders, though only about one-third had actually applied for it in the previous 12 months, according to the latest Small Business Credit Survey from the Federal Reserve Bank of New York. More than one-third of profitable companies said this was a major concern, and slightly less than two-thirds of those losing money felt the same way.
Interestingly, 63 percent of those which actually applied for credit were able to obtain it, which was more or less even with the rate observed last year, but of those who received credit, a larger number were able to get all the funding they wanted, the report said. In all, 55 percent of those who received this type of funding were profitable businesses, while slightly less than one in five was breaking even and more than one-quarter were losing money. However, when companies asked for loans of more than $100,000, slightly less than three-quarters received approval, while those looking for less than that amount were extended the requested funds just 57 percent of the time. Often, these smaller loan amounts were mostly being used to improve cash flow and cover operating expenses.
However, despite these facts, the number of small business owners who said they were discouraged by the lack of credit fell to just 18 percent of those polled, down from nearly three in 10 just last year, the report said. Those that reported these issues tended to be less profitable, and many of these owners were putting their own funds into the company. Those that didn't even both to apply did not do so because they either felt they had sufficient financing or were reluctant to take on more debt than they already had.
Taking on larger debt loads may be a point of concern for many owners, especially when they have to contend with higher prices for small business insurance policies they may need. These can include tech insurance or general liability insurance policies that may be vital in the event of an unforeseen circumstance.