01/15/14

A Bank Loan, the SBA, and Traditional Business Financing Options

No discussion of business financing options would be complete without talking about the local bank or the Small Business Administration (SBA). The last few years have proven difficult for small business owners as many bankers have moved upstream to bigger and potentially more lucrative opportunities. And the average loan size for SBA 7(a) loans (their most popular loan type) continues to move out of reach for the average business on Main Street. If the costs associated with underwriting and processing a small business loan of $50,000 is about the same as a loan of $500,000, it’s hard to blame bankers who see the value of hunting for bigger loans.

Access to capital isn’t the only challenge facing small business owners today, but it’s a challenge they are forced to grapple with any time they consider growth—which makes job creation problematic. I’m a big fan of community bankers like Traci Flynn at Holladay Bank & Trust. I did a podcast interview with her in September where she outlined what her bank does in addition to looking at credit score, time in business, and collateral, to find good small business loan candidates. She argues, and I agree, that there are hundreds of community bankers all across the country who take this same type of approach, you just need to look for them. Here are a couple of questions you should ask that should give you a leg up:

If I could wave my magic wand, I believe local community banks are the best places for small business owners to do business. Unfortunately, I don’t even have a magic wand and over the last 10 or 15 years as many community banks are either consumed by bigger banks or simply disappear, that isn’t the case. Nevertheless, if you have great credit, a healthy business, and acceptable collateral, traditional financing options like a term loan at the bank or an SBA loan are great options. Hopefully asking these questions will help you choose the right bank for your small business.

Click HERE to read more about your financing options.

Click HERE to read more about SBA loans.

Click HERE to read about a Merchant Cash Advance (MCA)

It takes a little cash to change the world.

So what are you waiting for?

About the author

Ty Kiisel
Small business evangelist and veteran of over 30 years in the trenches of Main Street business, Ty makes small business financing and trends accessible in common sense language devoid of the jargon.

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