Small Business funding may seem like a crapshoot, but there are ways to improve your odds. How can you narrow your financing focus?
Funding is a critical consideration for almost every small business. But what is the right type of funding for you? It can be hard to know; as StartupNation.com puts it, “people often go after the wrong type of funding for their kind of business.”
To get a read on where entrepreneurs are getting funding, we conducted a small business funding poll, with results so far indicating many startups are relying on owner financing – in other words, owners are using their own cash. This could in part be due to the continued shakiness of the economy, making bank loans harder to obtain. The U.S. Department of the Treasury established the Small Business Lending Fund to help ease this, setting up a dedicated fund providing capital to qualified community banks and community development loan funds (CDLFs) in order to encourage small business lending.
How can I get small business financing?
But what if this program isn’t for you? What if you’ve used your savings but need more cash? According to Enterpreneur.com it may be a great time to borrow. In a March 11, 2013 piece on loans for small businesses, William Dunkelberg, chief economist of the National Federation of Independent Business, revealed that now is a great time to approach banks for small business loans:
Banks have plenty of money to lend. In fact, the excess reserves at the Fed are at an astounding all-time high. With a capital reserves requirement of 10%, banks look to invest the other 90%. The problem is, no one is coming and asking for loans.
In the same article Jordan Peterson, senior VP of Business Banking Credit Strategy at PNC Bank, said that in 2012 PNC committed more than $4 billion in small business loans. He adds, “Banks are eager to lend to qualified applicants, but demand continues to be down as businesses struggle to regain confidence that was lost during the recession.”
Be persistent – finding loans for small businesses is easier than you think
The key is simple: Don’t give up. It’s not easy to find small business financing, but with thorough research and persistence you will find the right lending partner for you, one who will be happy to give you the loan you need.
Where have you found success with obtaining small business financing? Share in the comments!