Small Business Loan Approvals from Big Banks Fall in October
According to the Biz2Credit small business lending index, approvals for small businesses from big banks fell in October, the first decline in 7 months of growth, dipping by 0.2% from 20.6% in September. The slight decline still reflects some of the strongest numbers since the beginning of the Great Recession, and as business confidence continues to increase (although not necessarily the perception of success), both hard and soft indicators of economic recovery seem to be moving in the right direction, albeit at a sluggish pace.
Business owners may be more wary about debt now than at the beginning of the recession. One factor that may effect loan volumes is the fact that small business borrowers have been reticent about taking on debt, with many only seeking financing when it comes time to make capital improvements that are simply outside of the reach of their normal cash flows. For some with bad credit, seeking bank financing has been a relatively fruitless endeavor, with the alternative being seeking capital and a relationship from alternative lenders, whose speed and improving terms on renewal can make up for the higher cost of capital when used appropriately (and when partnered with a responsible lender). Nonetheless, small business owners should have plans in place for accessing financing before it becomes a pressing issue. Given that if businesses continue to grow, at a certain point they will almost surely require external capital, it’s a smart bet to know what their options are beforehand. Small business owners have been in survival mode for years now, and aren’t yet ready to celebrate light at the end of the tunnel. While good news in a time of economic recession is great news, small business owners are still remembering the toughest times they’ve gotten through and aren’t in celebration mode yet.
Photo Credit to Josh Boles on Flickr