Small Business Administration (SBA) Loans Drop

With the economy in doldrums, businesses find they have fewer options for business loans. SBA, usually a viable option for many businesses, now struggles to help small businesses.

Business owners had been going to the SBA for loans specially the 7(a) and 504 small business loans. Unfortunately, SBA has seen a huge drop in the number of small business loans they guarantee. It doesn't surprise consider the commercial lenders tightened credit, decreasing creditworthiness and lowed demand for loans from small businesses.

In 2007, SBA approved almost 100,000 loans. 2008 saw that number drop by 30 percent. Florida, Vermont and Rhoda Island SBAs, to name a few, saw a decrease in loans. Cities like Minneapolis and San Fernando Valley have put programs in place to help businesses get the needed working capital.

But not businesses live in a city or state with alternative programs in place. All is not lost for businesses looking for loans and lines of credit. Even with banks and SBA out of the picture, many financial organizations are available and have more flexibility. Experts advise business owners to seek loans with local community banks, private lending and alternative lending.

Community banks still have strict rules to follow about which loans to approve. More so, services-based businesses will struggle to obtain a loan from a bank more than businesses that have assets to use as collateral.

Veterans have another solution available. They could qualify for the Patriot Express Loan Initiative.

Even small businesses that have loans in progress find they're out of a loan when another institution has bought out their bank and the loan is gone before it ever arrives in their hands. Some lenders pull out at the last minute leaving businesses in the lurch. In fact, banks are referring small business owners to alternative lenders.

Obviously the loan situation varies by area and financial institutions. Don't agree to a loan from the first people willing to give one to your business. Look toward private and alternative lenders for a comparison. They might be able to get you the cash faster or have more flexible terms without expecting you to have been in business for X years or making $X money.

SBA loans tend to make it easier for small businesses to gain funding, but they're not always a sure thing especially now. No matter who you ask for a loan, be ready to present why your business is a good risk and will have the ability to repay the loan.