Small Business Loan 2014: New Business Loan Programs Make Impact
“The market is slowly recovering and improving,” said Jim Malcolm, Northeast small business strategy leader for San Francisco-based Wells Fargo. “Cash flow is just the biggest issue out of anything; entrepreneurs want to make sure they can control the ups and downs and not go crazy trying to expand.”
There are several promising signs of an uptick. As of the third quarter, banks nationally held 3.9 million small business loans of less than $1 million, totaling $29 billion. That number was up 6% over the third quarter of 2012, according to the Federal Deposit Insurance Corp.
The number of Small Business Administration-backed loans in New York City was 840 in fiscal 2013, down from 963 in fiscal 2012, but the loan volume was about the same, at $360 million. The number of loans is likely to grow this year, at the small end, anyway.
Break for 2014 Small Business Loan Borrowers
Small business experts identified three key trends for 2014:
Soft demand in the beginning of the year will grow stronger. Neither bankers nor businesses have an appetite for risk, having come through a harrowing recession whose effects still linger. Small businesses often tap real estate as collateral or put their profits into real estate. ExpressBusinessLoans.com offers many programs to small business owners that do not require collateral. Collateral is a key hurdle many small business owners face when applying for working capital through their bank. It will help, too, if the federal government can avoid any fear-inspiring regulatory fiascos, such as the one that accompanied the rollout of the Affordable Care Act.
The biggest sign of a turnaround may be when big banks’ loan approval rates begin to rise. These institutions are important because they offer lower interest rates, deep pockets and a panoply of services and products for small firms. Small businesses should be aware that these additional services costs add up and may not be as attractive in reality as on paper.
Competition for the most creditworthy small businesses will increase. Larger small businesses, with revenue of more than $10 million and a good credit rating, may find this year a great time to get a loan. “There are two or three banks competing in every deal,” said Don Maloney, senior vice president and regional executive of Chase Business Bank, who added that he would be happy to see a 5% to 10% increase in loan volume in 2014. The banks he identified as key competitors: Wells Fargo, Citibank and Bank of America.
Alternative Business Funding Continues To Become More Attractive
Alternative lenders will carve out a growing share of the market. With higher approval rates, competitive terms and funding quick many small business owners have found alternative small business lending to be the best option when seeking funding for their business.