Are Small Businesses Still Struggling for Business Loans?

Financing is the basic requirement of any business whether it is small or big. But, it also depends on the

kind of finance resources for your business loan. The reason of course cannot be similar so, before

applying for any business loan it is suggested to assess your business needs first and what will be the

rate of approval of your chosen resource.

The contribution of small business industry to the economy is not hidden to anyone. Yet, if we discuss

about the process of arranging capital and hindrances in the procedure then we found several

impediments. In order to arrange business loan a small business owner used to face various obstacles

that makes the procedure lengthy and complicated. However, the method of acquiring business loans

has been changed apparently during last few years especially after the introduction of numerous

financing options. Now, the availability of online loans makes the method all the more easy and less

time consuming.

Nonetheless, the question is still remain unresolved that why small businesses do not get easy business

loans in particular from big banks?

Big Banks’ Strict Loan Policy: Big banks are not really flexible when it comes to lending for small and

medium enterprises. The short span of small businesses and risk of repayment are mainly the

speculated reasons. Therefore, these banks either make the loan procedure too complex to apply or

approve only a few applications applied for small business loans.

Small Business Administration (SBA): Although, there is no direct involvement of SBA in the process of

small business loan. However, this government federal agency, U.S. works as a mediator between small

businesses and banks. And, after SBA’s approval Banks tie-up with SBA usually do not reject any loan

application.

Reasons for small business to get financing from external sources:

Start up Business Loan: Starting a business is not an easy task as it requires a lot of financing. Since, it is

the initial step therefore a business owner can invest only a part of his saving. This is one of the main

reasons for a start up business owner to apply for loan.

Loan for Business Expansion: The next step after the start-up and once a business start generating

revenue. A business owner would very naturally think for its expansion. However, it is obvious that the

financing cannot be fully arranged only with the profit margins. Thus, entrepreneurs look for external

sources of financing for their business growth and expansion.

Equipment Financing : It doesn’t matter whether it is a new business or an existing business. Equipment

financing can be a need of any business. Such loans are acquired to buy any machinery and equipment

for a business. Yet, it is not limited to only machinery but office equipments (computers, furniture,

software, vehicle etc) can also be purchased via equipment financing.

Before concluding, it is recommended do not restrict your search of financing till small and big banks.

You would rather explore many other options like financial institutions, private lenders, peer-to-peer

lending, loan from family or relative, venture capital, credit union so on and so forth.