Small Business Loans are Still Available
Will your business need a cash flow boost during the recession?
If you’re a business owner and concerned over media reports about tightening credit, you might be surprised at some of the facts that contradict the rumor.
First, a very small number of very large banks were involved in the mortgage market melt down. Second, there are more than 8,000 banks in the United States and the vast majority have money to lend.
Why is this so? As the stock market prices tumble, people with money to invest turn to two stable and safe havens: Treasury Bills, Bonds and Notes; and Bank CD’s and Savings. As a result, many banks are experiencing an influx of deposit dollars. That only helps their bottom line if they lend the money back out at higher rates than they pay for the deposits.
The ‘tightening’ issue comes in to play when the banks make decisions on your loan request. You may need more collateral, personal guarantees, or a larger spread between your real estate collateral value and the amount of the loan. The days of financing 120% of your home value are gone, and the ‘interest only’ payment opportunities will be more difficult to obtain.
What many businesses may be less familiar with are some other options for prospective borrowers that might provide funding when a direct bank loan is unavailable. The Small Business Administration provides loan guarantees to the bank on your behalf to supplement or replace a deficiency in collateral. Cooperative Business Assistance Corporation lends to small businesses at very competitive rates through a variety of programs with loan pools provided by banks and other sources. New Jersey Economic Development Authority provides loans to support diverse business projects and that includes lower rate products and longer repayment terms for certain requests.
Small business owners who need credit line products for the ups and downs of cash flow should also consider Home Equity Lines of credit. Why? The rates of interest are typically lower than traditional business loans and the repayment terms require much smaller monthly payments.
As a large Chamber of Commerce, most banks and the other lenders listed above, are members of our organization. We not only know the companies, but have relationships with many of the lending officers and senior officers to help our members find the right financing resource.
Millions of dollars in financing are available for business borrowers, so don’t be afraid to ask!
Art Campbell PresidentCEO Cherry Hill Regional Chamber of Commerce
