Over the past several years, many small business owners who have been hoping to put their companies in a better position to succeed through expansion may have found that obtaining financing to do so hasn’t been easy. However, as part of a recent push to improve access to new credit for small businesses in particular, the U.S. Small Business Administration recently enacted a few new rules that will go into effect later this month.
Beginning on April 21, more small businesses will be eligible for loans through the SBA as a means of improving their financial position, in the hopes that this will encourage more hiring going forward, according to a report from the Wilmington News Journal. In addition, the application process may be a little easier for companies to complete, so that they don’t have to go through as much of a hassle when they try to obtain such financing.
“One of the biggest challenges small businesses face is access to capital,” Natalia Olson-Urtecho, SBA mid-Atlantic regional administrator, told the newspaper. “Lowering loan barriers encourages entrepreneurs to start and grow businesses in their communities and strengthen our economy.”
What do the rules do?
One of the biggest impediments that many small business owners might have faced when trying to obtain this type of credit for these companies is a test of their personal resources, but this has been eliminated, the report said. Further, many enterprises might have been hindered in some way by requirements that projects for which the loan was being sought had to be under way within nine months of receiving the funds, but this, too, no longer applies. Other rules related to the ways in which these loans had to be collateralized in the past, and to decrease the risk seen in SBA loan portfolios overall, have also been altered for the potential betterment of owners and lenders alike.
However, many owners may still need to do some financial housekeeping before they apply for any type of financing that might help them to better their companies in the near term. This could include these entrepreneurs taking the time to shop around for more affordable small business insurance coverage. By cutting costs for these policies, such as liability insurance, they may be able to save thousands of dollars per year, which could then be devoted to improving other aspects of a company.