Small Business
Small Biz Lending by Banks Slowed by Obstacles
When a series of loan defaults in 2007 and 2008 plunged much of the world into a financial crisis, many of the "too big to fail" financial giants, the same ones that supplied the individual and business loans our economy relied on, were forced to complete
Dec. 02, 2014
When a series of loan defaults in 2007 and 2008 plunged much of the world into a financial crisis, many of the “too big to fail” financial giants, the same ones that supplied the individual and business loans our economy relied on, were forced to completely re-examine their lending practices.
A flurry of regulation passed in the aftermath of the crisis has limited the bank’s abilities to lend as they did before, but luckily for entrepreneurs in need of business loans, smaller more amenable lenders like Advantage Capital Business Loans (ACBL) are lending at a much higher rate.
In a recent interview with The Wall Street Journal, Ted Zoller, the director of the Center for Entrepreneurial Studies at the University of North Carolina in Chapel Hill, explained this phenomenon, saying, “It will take several years of stable economic conditions and strong business fundamentals for these banks to come back around to offer credit facilities for growing small businesses.”
Due to these difficult lending conditions, many assume that bad credit business loans are simply out of reach. While that may be true for big banks, small banks and bridge lenders like ACBL look at much more than just credit history when approving loans. Underwriters at ACBL can take more time to review each application, and carefully comb over each business’ financial records to determine whether their revenue stream can support repayment.
As Mr. Zoller explained, “small businesses are generally finding strong partners in regional banks who are familiar with the economic conditions on the ground and are prepared to share the risk with the business owners.”