Bad Credit Business Loans And the Small Business Funding Pinch

bad credit business loans

Since the beginning of the Great Recession in 2007, small business lending took a dramatic hit, building on a gradual trend of decline that first started in the mid 90’s. Many small business owners were not only faced with tighter lending restrictions from banks and credit unions, but also devalued homes and collateral thanks to a break in the real estate market and inflation. Small business hiring slowed down, freezing the major source of job growth in the US and worsening the economic situation. Small business hiring is only now beginning to pick up as the economy starts to thaw, however things are far from ideal, and many businesses are still cut off from funding, in holding patterns and experiencing little growth or opportunity to make new hires. Within this economic climate, an even more problematic situation was encountered by the subset of business owners who had their credit damaged during the recession. Typically, business owners who had taken out loans to finance anything from a new car to a college degree suddenly found themselves unable to make payments when a major source of income dried up, or the sales they had been relying on took a hit as consumer spending tightened. Years later, these business owners with bad credit would still find it difficult or flat out impossible to obtain business funding, even from SBA backed lenders. Horizon Business Funding entered the equation years ago in  order to address the needs of the multitudes of business owners who were considered to be too high risk by banks. By using a personalized approach to understanding individual financing needs, Horizon Business Funding has been able to report a high rate of success working with these business owners, the majority of which go on to refinance and create a long term funding relationship.

Small businesses historically have been the major job creating forces in the United States. Not only are these businesses important by virtue of the diversity and character that they bring to our neighborhoods, they create competition and encourage innovative products. It is discouraging that business lending is one of the first programs to see a massive dip in volume in times of economic hardship, yet that is precisely what has been the case for the past six years. It is essential that business owners be able to access capital, as business owners are an integral sector that will drive the economic recovery of the US.

Photo Credit to Joel Penner on Flickr

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