Jun 10, 2013 Philip Burgess
Community banks have traditionally been safe havens for small businesses seeking loans. However, short term lenders appear to be the most viable option for Main Street borrowers these days.
Bloomberg recently highlighted the trouble that some businesses are having when it comes to obtaining loans from small banks. The source noted that Jim Brown, owner of Atlanta-based building firm JWB Properties, has been unable to borrow from local banks.
Prior to the Great Recession, Brown stated that banks in the area were constantly calling him, trying to convince him to use their lending services. However, these financial institutions have tightened their lending standards as a result of the economic downturn that plagued them. That's led to Brown being unable to have his loan applications approved, Bloomberg indicated.
Although the loan approval rate for small banks across the country remains solid at 50.9 percent, according to Biz2Credit's Small Business Lending Index, alternative loan providers are more likely to support small firms. Short term lenders and other alternative financial services approved 63.4 percent of loan applications in April.
America's small business owners may find these alternative loan products attractive. They tend to have shorter payoff periods and are easier to obtain, making businesses more flexible with their finances.