Even as the need for business loans is on the rise, the LA Times reports that many bank are unable to offer commercial loan financing. This leaves many small business owners at the edge, hunting for a line of business loan financing to tide them over in the slow economy.
Banks have always traditionally been difficult to get commercial loans financing from, but now it may have gotten even more difficult. Banks have extraordinarily little funding available to offer customers business loan financing; much of the funding vanished during the banking crisis of the last few years.
The mismanagement that caused the banking crisis and the resulting economic meltdown, are also responsible for the slow economy that has caused a record number of small business owners to seek out commercial loan financing in the first place.
For a short while bank’s were able to use government bailout money to provide small business commercial lending financing and relief, but as an LA Times’ article reported in July, these funds have now been used up.
This left many small business owners out in the cold and looking for creative ways to keep their small business alive. Many have decided to turn away from big banks and government bailouts and look to the private sector for a solution.
Commercial Loan Financing and Lending Companies
When the banks stopped lending, it left a need for commercial loans that private companies have been able to fill. These private lending companies specialize in alternatives to the limited commercial loan financing offered by traditional banks.
Because private lending companies operate under a different financial system than the one used by banks, most lending companies did not participate in the bad lending practices that banks did when they caused the economic meltdown. As a result, lending companies were not hurt by the banking collapse and have been able to continue providing commercial loans and financing, even as many large banks closed their doors or turn away business owners in need of a loan.
Lending companies also offer a wider selection of loan and financing programs than a traditional bank. These include: loans for business owners with poor credit, merchant advances based off of credit card sales, factoring on account receivables, leasing and more.
Business owners should shop carefully when choosing a lending company, as some will charge more expensive fees than others. Select a company with a good history and one that has access to many sources of funding, because they will often offer you the best rate.