News was good for everyone in the U.S. this month with the report that the unemployment rate dropped to its lowest in four years. Yet many small businesses and entrepreneurs in the Bay Area are waiting for the final word on the “Fiscal Cliff” before they expand, purchase new franchises, order larger inventories and hire more workers.
As history has shown, those who take advantage of lower rates and lower cost of goods prior to an upturn, reap the rewards sooner than those who waited. There are relatively low cost capital options available as interest rates for small business lending have never been lower.
According to the latest issue of the Federal Reserve’s Beige Book, demand for business and consumer services expanded in the area since the last publication. Consumer demand remained at an upward growth and many businesses chose to spend their limited capital on IT equipment and software. Moreover, the reports continued to highlight “ample liquidity and stiff competition among lenders to provide credit to well-qualified business loan applicants, with community banks facing increasing competition from larger national banks for small business lending.” Indeed, big banks are getting more active in small business finance.
This in itself is a conundrum for many small business owners who want to take advantage of lower rates and lower cost of goods. They have the ability to repay loans, but residual from the Great Recession is that their credit ratings are not among the highest. These entrepreneurs have sought unconventional lenders who combine credit ratings with other factors such as cash flow and accounts receivable. According to the Biz2Credit Small Business Lending Index, approvals from the non-traditional lenders like Community Development Financial Institutions (CDFI), micro lenders and merchant cash advance lenders grew to 64.7% in October. Companies such as Biz2Credit can help these individuals by matching businesses with lenders who meet their criteria.
This article was submitted by Mary Branca, she has a Bachelors of Journalism from the University of Georgia and spent 20 years in marketing management with national companies in the Southeast, Northeast and Midwest. She has combined her marketing experience with her passion for writing.