Business Loans

photo credit: World Economic Forum

As our economy continues to weaken and credit markets freeze up, stories abound in the media about bank’s holding back on their small business loans. But let me tell you what it is like in the trenches: Most banks are not lending at all. In fact, they are closing the door even to existing loans and lines of credit. Pretty bad, right? I am not going to sugarcoat it. Frankly, you have heard too much of that lately in Washington. This article will give you some suggestions as to where your search should begin in finding a small business loan.

So forget about buying a ticket to Washington and asking for your own private bailout. Let us start with an actual example. ABC Company has been in business for five years selling fire protection and extinguisher products to apartment units and office buildings. Although the profits have ebbed last year a bit, it has seen increased gross income each year and in fact had to hirer five additional employees. Because of material costs, a $150,000 home equity line was taken out for business purposes. The owner, Mr. X, has a credit score of 760. Unlike many Americans, there is very little personal debt and his credit cards are well below the 25% available limits. Because of profitability, the credit line was down to a mere $15,000. Suddenly, without any advance notice, he was informed the credit line has now been cut to $50,000.00. Having relied on this credit line, two large contracts were recently signed which required the purchase of a substantial amount of inventory. Now it is problematical whether he will be able to complete one of the contracts. Does this sound pretty close to home? read more »

photo credit: gaobo

With major corporations announcing huge layoffs and no jobs readily available to the newly unemployed, more and more people are finding the courage to start their own business using skills they already have or learning new ones.

In fact, a new poll states that the majority of people in the U.S. believe small businesses and entrepreneurs will lead the country out of the recession, as long as the financially-beleaguered banks start making it easier for those small businesses to get loans. In President Obama’s recent speech to Congress, which was met with mixed reviews from small business owners, he did mention entrepreneurs and small-business owners, calling them the “the hardest working people on earth.” read more »