Small business loans are gaining popularity with traditional banks thanks to an influx of cash from the Fed, a good sign for the economy as a whole, but especially good for mom and pop shops up and down Main Street USA. Small business owners are looking now, more than ever, for a cash boost as many still struggle to overcome the Great Recession of 2008-2012.
Many banks are expanding lines of credit currently occupied by these businesses which is also welcomed by business owners. One such case is that of Laura Benson who says, "They just gave me the $7,000, without my asking," Benson says. "Omigosh, just when I needed it."
One surprise in the U.S. Small Business Lending Program comes from Michigan, who leads the nation in such loans. Possibly the most affected state by the Great Recession, Michigan has awarded over $69.5 million to small businesses since the program's start in 2010. The state has given 88% of its $80 million fund availability already to state small biz owners.
This jump start was the brainchild of Michigan State Representatives Gary Peters, a Democrat representing Bloomfield Township and Debbie Stanbow, also a Democrat representing Lansing. "Small businesses in Michigan are a vital part of our economic future. The SSBCI program has helped thousands of small businesses get the private investment they need to thrive. It has helped these businesses grow across Michigan, creating jobs and growing our middle class," Peters said. "I will continue to fight for Michigan small businesses and develop thoughtful solutions to support job creation and a vibrant middle class in Michigan."
Another segment of the banking market still seeing success is the secondary loan market. Mostly privately funded, these secondary loan providers offer small businesses an boost of cash over a short period of time, most loans to be repaid in as little as six months. Many of these companies look at alternative repayment sources such as credit card processing levels, Paypal sales, and even Ebay or Amazon sales.
While some small business owners may find that their bank(s) still are not approving their applications for standard loans, these secondary market loans are an alternative method to small business loans to receiving emergency cash, or temporary cash flow. However, these alternate methods of financing your business comes at a price. Some lenders charge an annual percentage rate of 25% or higher. A business owner should be aware of all options when shopping small business loans.