Revelations as to who is getting funded by the SBA are raising critical voices around the organization’s activities.  What do luxury car dealerships, exclusive resorts, and boutique cosmetic surgery clinics all have in common? According to an article contributed to Forbes by Adam Andrzejewski, they are all among businesses aimed at serving the needs of the very wealthy that are recipients of subsidized SBA loans, supported by taxpayer money. The SBA does not directly provide business loans, rather it guarantees the loans against tax payer money, with the intent of providing subsidized rates for small businesses that need capital to grow, but are wary of taking a loan from a private bank carrying a rate that they can’t afford, or simply can’t get approved for a typical loan without a government guarantee provided by the SBA. However, in the cases that are pointed out in the Forbes article, luxury businesses that could most likely get a loan from a wide number of private financial institutions

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

  Optimism rises, but much stays the same in regards to small business owners outlook.  NFIB small business optimism readings from August reported an increase of 0.4 points, putting the index at 96.1 points, bringing it to the second strongest reading since October 2007. Despite this, small business owners still report general uneasiness about the next six months, with the majority predicting worsened business conditions as opposed to improvement. Overall, despite a trend of overall increase, small business optimism has been slow to recover and really only has made modest gains. According to NFIB Chief Economist William Dunkelberg, weak consumer spending is one of the reasons behind the anxiety small businesses feel regarding their sales numbers, with low consumer sentiment and a lack of growth in terms of incomes preventing meaningful increases in consumer spending. This months report was summed up as basically “more of the same”, not bad news signaling a backslide into another recession, but not much good news either.   Photo Credit

In a recent article from the Wall Street Journal, research from the Fed was cited indicating that the negative effects of the recession, the worst since the two recessions in the early 80’s, had a disproportionate impact on smaller businesses (in this case, businesses with 50 or fewer employees). These businesses were cited as experiencing an approximately 5-10% worse drop in job creation, paired with a slowdown on the creation of new businesses by 25%. Financing constraints pointed to as one of the root causes of small business stagnation. The credit crunch which accompanied the recession has been cited as one of the causes of the lack of growth coming from the small business sector, with former SBA chief Karen Mills also pointing to lack of loan accessibility as an adverse condition for small businesses. Without reliable access to financing, businesses have a hard time expanding beyond the constraints imposed by their cash flows and ability to borrow from friends and family or out of personal

Bad credit business loan alternatives continue to grow in popularity, as credit has largely remained tight for small businesses on the part of traditional lenders. Using merchant cash advance to keep a business growing through a period of bad credit issues or as bridge financing while growing into traditional loan eligibility are both common applications of this type of funding, which due to its expedited underwriting speed can be used in a pinch when other funding sources would be too slow. Even so, business owners should be aware of what goes into an application and what will effect how much they can qualify for. Bank statements are an important part of an application. Knowing what yours look like can help create a better picture of what you can qualify for. Generally, business owners will need to submit their three most recent months of bank statements for their primary business banking account. The number of deposits, frequency and size all play a part in determining the

Alternatives to small business loans have grown both in popularity and exposure over the last few years, primarily because of a lack of other financing options for many small businesses that don’t meet the heightened credit requirements many banks adopted in response to the Great Recession. While bank lending to small businesses has ostensibly thawed, it is still not enough for the majority of small business owners, many of whom are either too small, don’t possess enough collateral, or are too new to successfully approach a bank. Alternative capital attempts to fill this gap in the credit market with financing options that are both expedited and available to businesses with financial histories that would disqualify them from a bank loan. Business owners should view alternative capital as part of their road to business loan eligibility. While alternative capital has higher costs associated with it than bank loans, the expedience with which they can be accessed as well as their wide availability make them extremely useful in

In the aftermath of Hurricane Sandy, the US Small Business Administration was widely criticized for what many saw to be a sluggish response to the natural disaster, where many businesses that needed aid in the form of SBA backed loans were not able to have their applications processed within 30 day, with the average of 51 days turnaround for disaster loans. Now, watchdogs tasked with monitoring the Federal organization claim that the numbers posted by the SBA were padded by a large number of fast redirections of applicants for bad credit business loans. As reported by App.com, 40% of the total disaster loan requests processed were bad credit loan requests which are typically diverted out of the main application channel within 3 days. Bad credit business loan applicants would significantly effect average processing time. If 40% of the reported applications processed were quickly diverted to other relief channels, removing them from the average processing time would have major implications regarding the average processing time of the

Small business owners with bad credit have financing challenges which make it more important that they pay attention to their cash flows. The dearth of traditional small business loans for bad credit applicants means that for financing they will often have to seek out a working relationship with an alternative capital provider, where bank activity is more important than credit when underwriting. Additionally, the marketing budget of their company has to be tightly managed in order to ensure that it is able to create ROI, since every dollar that goes out the door needs to be made back with little room for error. In order to make sure that they are not losing money, small business owners should strive to create good habits for themselves and be cognizant of the effects of their budgeting choices. Choosing to invest in one area on a limited budget means that you may have to divert resources from another, making identifying the strongest performing areas of your business into

A business’s inventory is not only part of its overall value, it is also what allows it to pursue larger contracts or orders with confidence that client demand can be met. While having excess inventory on hand is a waste, having too little inventory puts business owners at a disadvantage when trying to expand. If they approach larger clients hoping to secure the business they need to grow, they may all of a sudden be asked to handle orders that are much larger than they are accustomed to processing. If they are not stocked with the inventory they need, without a means of rapidly acquiring it they could lose the business they worked so hard to win. Bad credit business loan alternatives offer a solution. While a traditional small business loan requires a lengthy process of due diligence, alternative capital providers generally require less information and therefore are able to approve and fund accounts in a much shorter period of time, often within the 48 hours

There are many financial products geared for small business owners out there. Since the financing landscape can be so alien and complex, small business owners might not be fully aware of the range of options available to them. For small business owners who, due to bad credit or other financial issues, can’t find financing from traditional small business loan programs, the issue can become a lot cloudier. Aside from taking the time to create a plan regarding when to apply for financing, they also need to consider what they are eligible for in the first place. Where bad credit business loan alternatives fit in. More commonly known as merchant cash advance, these products function similarly to small business loans, but emphasize monthly sales over credit score as their main criteria for approval. These products are typically much faster to get approved for than business loans since they don’t require collateral, so for business owners who have bad credit or for those who simply need fast access to

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