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Small businesses are the backbone of the U.S. ECONOMY. According to the Small Business Administration (SBA), 99% OF AMERICAN COMPANIES qualify as small businesses. Together, the 28 million small businesses in the United States account for 55% of all jobs.
Since 1982, the number of small businesses has INCREASED 49%. Since 1990, small businesses have created 8 MILLION NEW JOBS, while big businesses have axed 4 MILLION JOBS.
The Need for Financing
Small businesses, by definition, lack the resources that large organizations have. That’s why 60% of small business owners worry about their cash flow every month. Cash shortages, however, can be overcome by partnering with the right lender — which is what many small business owners have tried to do.
53% of small businesses have applied for funding over the last five years.
With a small business loan, companies can:
- Hire more workers
- Buy new equipment or technology
- Renovate a dining room, storefront, or office space
- Launch a marketing
- Cover unbudgeted campaign expenses
- Open an additional location
- Pay bills on time
You used to be able to walk into the nearest bank to secure a small business loan. BUT TIMES HAVE CHANGED.
78.7% of small businesses had their loan applications denied by BIG BANKS.
Best options today can be found researching online for a lender in your area (ex. Cashfloat UK)
Common Small Business Loans
LINE OF CREDIT
Comparing Different Lending Options
Traditional Bank Loans
Ever since the Great Recession, banks have approved fewer and fewer loans. After suffering losses when the economy collapsed, banks now typically prefer to lend larger sums of money to even larger businesses:
- To apply for a traditional bank loan, borrowers need to fill out extensive paperwork and submit comprehensive business and financial information.
- They also need to be prepared to put up collateral so that the bank can recoup its costs in the event you default.
- Banks generally don’t lend money to new businesses, and they prefer borrowers that have near-perfect credit scores.
58% of small business loans under $1 million were written by banks in 2009
43% of small business loans under $1 million were written by banks in 2015
70% of small business owners are interested in loans of $250,000 or less
23.4% of small business loans were approved by big banks in September 2016
48.7% of small business loans were approved by small banks in September 2016
60 days if you’re lucky enough to have your application approved, it will still take two months for money to be deposited in your account
The SBA also guarantees some loans. But as more and more regulations go on the books, fewer and fewer small businesses are securing financing this way:
Small business owners need to complete a ton of paperwork to secure an SBA loan.
Borrowers need to personally guarantee loans from the SBA.
Unlike bank loans, SBA loans are available to startups.
324 banks dropped out of SBA loan programs over the last four years.
50% fewer small businesses qualify for SBA loans in the aftermath of the Great Recession.
It may take nearly three
onths for your SBA loan application to be approved if your small business qualifies.
Because banks and the SBA have been lending fewer and fewer dollars to small businesses, a number of non-bank lenders have risen to fill the void:
- Unlike banks and the SBA, non-bank lenders don’t require small business owners to submit scores of paperwork. All that’s needed is some general business information and a few months’ worth of bank statements to demonstrate steady revenue.
- Non-bank lenders don’t require borrowers to have flawless credit scores.
- To qualify, businesses generally have to have been open for at least one year and have $100,000 in annual revenue.
59.7% of loans applications were approved by non-bank lenders in September 2016
26% of small business loans originated from non-bank lenders in 2015
10% of small business loans originated from non-bank lenders in 2014
15 MINUTES is all you need to spare to apply
Money can be in your bank account within one business day
Tips for Success with Your Small Business Loan
Just because you apply for a small business loan doesn’t mean you’re going to get one. But there are some things you can do to increase your chances for approval:
- Maintain a steady balance in your bank account
- Build a strong social media presence
- Earn a favorable online reputation
Just getting a loan by itself isn’t going to automatically solve all of your small business’s problems. You need to have a detailed plan about how you’re going to put the money to work to grow your business.
Partner with a reputable lender that can help you through the process and you’ll increase the chances your loan will be put to use successfully. It’s that simple.
Do you need some extra financing to keep your business operations going? If so, try all these small business loan tips.