Getting A Small Business Loan

America’s economy remains uncertain and serious questions about the U.S. economy’s health are alive and well.  Consumer spending is falling by the day and rising inflation is putting a major dent in the confidence of virtually every American citizen.  With that grim fact, it’s no wonder acquiring credit, for small business loans, has become a very real challenge for up-and-coming entrepreneurs, as well as those who have already established themselves and wish to expand.  Within a two year period, from 2008 to 2010, the total value of small business loans decreased by a shocking $60 Billion.  However, there is hope!  Even though the economy may have a chokehold on the throat of small business loan endeavors, government programs, such as The Small Business Jobs Act, have the power to loosen that grip.  This act, signed into law in September of 2010, provides critical resources to help small businesses continue to drive economic recovery and create new jobs.  It has bolstered small businesses and freed up lending lines.  For additional information on how The Small Business Jobs Act can help your entrepreneurship endeavors, emails can be sent to:

Small Business Administration And The ‘ 7 (a) Loan

The Small Business Administration, or SBA, offers what is termed a ’7 (a) Loan’.  The proceeds from this type of loan may be used to acquire a new business, or proceeds can be used toward the continued operation or expansion of an established business.  The 7 (a) option, coupled with The Small Business Jobs Act, provides banks with reassurance so they will, actually, want to lend to small businesses and, also, it encourages small business owners to apply for those 7(a) Loans.  The Small Business Jobs Act provides a guarantee against default to 90% and, also, raises the loan amount to $5 Million.

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Small Banks

Smaller banks have their place as a potential lending option; but why smaller?  It’s the smaller banks that have, historically, catered more to entrepreneur endeavors.  However, local or regional banks are, also, known for turning down viable loan-seekers due to a lack of capital on the bank’s end.  Regardless of what bank one might consider, one needs to be aware of a bank’s financial strength; and the information, below, is worth investigating:

Texas Ratio:  Do your homework and investigate a bank’s ‘Texas Ratio’.  This ratio measures the financial stability of a bank based on its credit worthiness; and is widely used throughout the banking industry.  Simply put, as the ratio-derived score approaches 100%, the bank’s risk of failure increases.  A Texas Ratio score of more than 150% indicates very slim potential for lending and borrowing activities.

Consent Order:  A Consent Order can involve disciplinary proceedings against a bank which should raise a waving, red flag.  If a Consent Order is in place, it would indicate a bank’s weakened financial condition with attached lending regulations.  At , one can receive information regarding Consent Orders involving banks throughout the United States.

If an entrepreneur wishes to secure a bank loan, he or she should target at least 10 banks and work through that listing.

Entrepreneurship is not for the faint-hearted.  One must be boldly aggressive and extremely determined, in addition to being well equipped with a well thought-out plan for future profits.  If a business isn’t making a profit yet, one must be prepared to demonstrate to a banker how that will change in the short term.

Getting the capital one needs to invest in a new business or maintain or expand an existing business is not impossible; and, fortunately, companies with sound business strategies can still borrow!

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