Business Funding In Tough Times
In times of recession, the hope of the United States economy usually lies with small businesses. In the last 15 years, it’s estimated that small businesses have created 93.5% of all net new jobs. They provide the stimulus needed to re-energize the economic engine and get people working. Small business owners may take pride in that fact, but they need working capital in the form of business loans to do their job. Right now, with the credit crunch in high gear, it can come as a surprise to find out that the government has targeted the Small Business Administration (SBA) for a 3% cut in their budget – that’s after already having decreased funding for this agency by 28% in the last eight years. This is important information for entrepreneurs who are trying to obtain financing through the programs administered by the SBA. In these tough times, business owners will have to find some creative financing measures to keep afloat and to help spur the economy to recovery.
Small businesses tend to run lean and have cash flow requirements to override market fluctuations. Debt is a part of running a small business, but it should also not be crippling debt. In the past, many sole proprietors end up using their home equity to help support the first few years of a new small business launch. By leveraging the home’s equity, a bank may be more willing to provide a small business loan. Other sources of loans besides the SBA and the business owner’s own private assets are private lenders or short-term payday lenders. Here the interest rates will be higher, but funds can be made available very quickly to help for temporary cash flow gaps.
ya! Hope, in each and every country the small business sector supports a great during the recession period and it helps the country to recover from it., however the banks should help the small businesses to face it’s working capital at a reasonable interest.
Posted by Rowena on June 12th, 2008 11:44 am
Yes, China economy seems to be tough later…. I agree with you
Posted by scaffold on July 8th, 2008 7:35 am
Small business is great way to some people who want develop they creativitas
Posted by Loan24 on July 22nd, 2008 10:32 am
hey i’m from the uk and it’s the same story over here. there used to be an organisation set up to help fund small businesses but as of 2 months ago they’ve stopped any additional funding. going to the banks is a nightmare in the current climate also. hope things turn around.
Posted by http://theforexfunnelreview.blogspot.com on August 17th, 2008 7:27 pm
Well I wanted to say that business funding is the most important topic right, even thought if the country and these are wrong time.
Posted by Sarah Hayes on August 20th, 2008 5:30 pm
One thing that can help business save money during hard times is by offering cheap insurance quotes to their employees. By shopping around small businesses can find the right policy to help save money.
Posted by Zack on August 29th, 2008 6:34 pm
It is few months later, and it is clear that all government rescue efforts are directed at rescuing Wall Street and banking sector. With overall credit freeze there is literary no money left for providing loans to small businesses. We are experiencing this ourselves, with credit lines being cut or frozen, there is almost no place to go but for high interest private loans secured against future pending cash flows. besides recession thread and decreased consumer spending, many, many small businesses will vanish in very near future. Yet it is small businesses who are the biggest employer of general public. IMHO, lack of sufficient funding for small business will result with even greater recession and rising unemployment rate. Which may turn recession into depression. Someone needs to advocate on behalf of small businesses in congress not to forget about the most pressing needs of small business sector or we will have unemployment rates raging in the teens.
Posted by Jack on October 11th, 2008 7:52 pm
Nice article, good gift for little business owners. Thanks a lot.
Posted by Meredine on October 13th, 2008 5:40 am
Hello.There is some valuable information in your site.Thanks.
The most important task to obtain small business finance is preparing a business plan. In small business finance, business plan can provide the borrower to know what amount to be raised for the business.
Posted by commercial loan business on November 11th, 2008 10:40 pm
The economic conditions have made it tougher for businesses to raise finance. Small businesses should look towards other innovative methods to raise finance and not restrict themselves to traditional methods. Pension schemes are one such area where a small business can take out loans from small self administered schemes.
Posted by SSAS on November 15th, 2008 4:08 pm
With current Financial crisis funding has become more difficult
Posted by Viay Kush on November 20th, 2008 9:19 am
I absolutely agree that small businesses have the best chance to survive recessions. It’s important than there’s a good fundamental. There are plenty of companies in the startup phase, getting millions of fundings without having the right fundamental.
Posted by Stefan on December 16th, 2008 9:00 am
“Small businesses tend to run lean and have cash flow requirements to override market fluctuations.”
This is a difficult statement for me, would you explain it out?
Posted by Banking Postcards on December 17th, 2008 3:56 pm
93.5% of the new jobs? Hmmm… That is too great!!
There is nothing without these Small Business Firms!
Posted by Teenage Businessman on December 28th, 2008 12:47 pm
It seems that this post was made a long time ago.
The current economic situation is so much different that it was back then. I’m sure the credit crisis has given a lesson or two to the overspending population
Posted by George on January 6th, 2009 1:39 pm
I think you hit the nail in the head with the article. It’s a tough time for all businesses. In my case, my import /export business is very slow these days because of the economy. Funding is the most crucial part of my business.
Posted by Import export Mexico on January 9th, 2009 3:39 pm
Wouldn’t you think it’s a lot tougher to be a granted a loan during this time of financial crisis? Only the ones with existing businesses are given loans. New players are ignored for the time being.
Posted by Reese on January 22nd, 2009 2:19 pm
I agree, we should be thankful for small businesses because they can help a lot in revitalizing our economy. Like any other business, money is an issue. I’m just glad that during tough times like this, business loans are there to help these businesses out.
Posted by Business Change Management on January 29th, 2009 2:26 am
We’ve put together a number of financial guides for company directors. Hopefully they’ll come in useful for some people.
Posted by Cicero Finance on February 4th, 2009 4:12 pm
I never knew small businesses created so many jobs.
Posted by Johannes on February 14th, 2009 7:47 pm
I don’t usually comment on these things, but I just got a lump of cash from an inheritance cash advance. I used a company called http://www.heiradvance.com. Anyone who has an inheritance coming to them qualifies for this. They have a video that explains it all here:
http://www.youtube.com/watch?v=O3BkaGAITAw
Good, luck all.
Posted by jackknox@ymail.com on February 16th, 2009 10:16 am
No matter how the economy is today we still can get loans for our business, or to buy something all we need is a good credit score. We just have to see to it and make sure that nothing is affecting our credit scores.
Posted by samy on March 10th, 2009 3:29 am
With the economy struggling the way it is, it’s easy to convince yourself now may not be a good time to pursue that great idea or start that new business. In reality, if you think things out thoroughly, now is the best time to take the plunge! Get a hold of a SBA with a low interest rate while you can.
Just like the housing market, the job market will heal itself with time and it will get more and more expensive to take your dreams and goals to the next level. Jump on the train while the tickets are cheap.
Posted by Birmingham Bankruptcy Lawyers on March 18th, 2009 5:16 pm
It is difficult to find business funding. It has always been tough, but in today’s economy it is almost impossible, just go on line and do a
to see how many struggling financial institutions are out there. Lenders have all but dried up. Investors are worried about investment recovery. It is a risky proposition at best to put money into any investment. However if you are cautious, watch trends and do your homework you can still find places to get funding as well as find solid places to invest you cash.
Posted by Planet Buzz on April 10th, 2009 4:06 pm
I think that this economical crisis is perfect for cleaning out the weeds in the economy. It’s only natural for small companies to thrive, because otherwise you would have financial fascism.
Posted by Erik on April 16th, 2009 8:21 am
Getting fund at the crucial time, especially during trying times is the most important thing for the survival of any business and you have aptly described it. Reducing unnecessary expenditure will help to solve some of the money problems…
Posted by Automan on May 13th, 2009 7:25 pm
nice articles,i like this blog..
Posted by Finance:Banking & Credits on May 14th, 2009 1:10 am
nice post.. I’m hoping obtaining credit gets easier for my business, as cash flow is a problem right now.
Posted by howto trade stocks on May 22nd, 2009 6:44 pm
It really is a shame that small businesses are on the decline. I really believe that we should invest much more into small businesses.
Posted by tilt rakeback on June 1st, 2009 7:39 am
I think that the small business sector of the US is going to have a tough time getting started in this climate. With the tight restrictions on lending and the fear that is running rampant through the minds of every entrepreneur i don’t think many people will be taking big risks in the near future.
We have all this stimulus money going towards certain things which will help a bit, but it is more likely to help established small business, rather than start ups. My father, for example, has a small business which sells pellet and wood stoves, and now there is a tax credit for alternative energy appliances such as these stoves. Needless to say, he is going to have a good year, however, someone trying to start a stove business would have a very difficult time because they lack the customer base to take advantage of this credit.
Posted by Keith - Forex Made Easy on June 20th, 2009 6:16 pm
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Posted by Anna - Google Cash Sniper on June 21st, 2009 6:43 am
Great post!
I think small business will give many benefit if economic condition well!
Posted by Dwie on June 24th, 2009 2:18 am
I am totally agree with this part “…Debt is a part of running a small business, but it should also not be crippling debt…” I had a bad business experience for received a big loan and then it was impossible to me pay my debts so I went to Bankruptcy and lost my office and work
Posted by Yasser (SEO) on July 14th, 2009 5:44 pm
What is curious is I’ve found many business owners now who take a chance to build a business have absolutely no problems with filing BK in the event the business fails. Before the recession, it seemed like BK was still something people wanted to avoid as only a last resort, but with the economy crunch many people are thinking of BK in the same way Donald Trump does… it’s just another tool in the tool belt to be used if circumstances warrant.
Posted by efusjon on July 19th, 2009 2:11 am
Thanks for this excelent post about Business Funding. I’m studing more about this.
Posted by Ganhar Dinheiro on July 27th, 2009 5:37 pm
Small business owners should be encouraged in many ways these days as the economy leans on these new initiatives. It should be made more easier to get business credit to give them a fair chance of surviving in these hard times.
Posted by Postbank lenen on July 28th, 2009 6:55 am
Another option could be Kiva.org. They are starting to offer micro-loans int he United States. I have used them to give micro-loans to people in South America and Africa. They are a great organization that really “gets it”./
Posted by @JamesFowlkes on July 29th, 2009 6:40 pm
its alot tougher these days now especially the economy downturn but im totally glad that my company is doing well at this time…
Posted by mark on August 3rd, 2009 9:01 am
I find it really dificult to find funding for my business ideas at these harsh times. Banks are sceptical on loaning money these days, so your blog came as a great information provider.
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Posted by Zelimir on August 3rd, 2009 1:28 pm
Wow, this was a year ago, how much worse have things gotten. I have people looking for commercial lease space and with no money coming in… they must have established credit with their business or forget about it. This is not a good time to start a business unless you have upfront capitol.
Posted by Mckinney Real Estate on August 14th, 2009 4:01 pm
Indeed the economy is hanging by a thread and mostly people are now depending on small businesses to survive.
Posted by sam on August 17th, 2009 1:29 pm
The crisis has put everything in its place
Posted by Nikolaevi4 on August 27th, 2009 1:36 pm
Debt is such a big part of business and cash flow, if the goverment does not act to make cash easier then many more companies will go to the wall
Posted by Bonds Rate on September 1st, 2009 4:12 pm
Great article with lots of great information.
Posted by Ashlee on September 7th, 2009 11:19 pm
My advice is always do your math before going into another debt just to keep your company stable during these tough times. Sometimes, pulling out is the best option rather than being crippled by debt.
Posted by Jen on September 16th, 2009 11:34 am
My advice is always do your math before going into another debt just to keep your company stable during these tough times. Sometimes, pulling out is the best option rather than being crippled by debt.
Posted by Jen on September 16th, 2009 11:34 am
I would add if you are looking to get business financing today, make sure you have a solid business plan and a good sales pitch. It is much harder today then two years ago. But as the economy comes back it should improve.
Posted by Atv Financing on September 23rd, 2009 6:54 am
Started a small business myself last May, and trying to get a small business loan was a complete joke, and it was for a VERY minimal amount. Ended up taking out personal loans and turned profitable in under 12 months. It’s not an easy road to get financing these days, that much is for certain.
Posted by Group Medical Insurance on October 8th, 2009 6:29 pm
It’s rough right now- I haven’t been able to get an sba loan for my business even though I have 3 years of solid financials to show them.
Posted by Nate rivers on October 21st, 2009 12:12 am
But the suggestion of using a how or, a why in a bullet point is indeed valuable.This is a way will create inquisitiveness and people will identify it with some of their problems thus inducing them to read on or, explore further.
Posted by Wedding Function Venues News on December 17th, 2009 5:56 am
I agree, banks have really gone on red alert with lending now. Someone I spoke with was trying to buy a $420,000 house with good credit and $200,000 down and he couldn’t get a mortgage loan…wow. One financial product I’ve seen more businesses turn to is cash advances on their merchant accounts.
It’s basically a loan which is repaid by future income from your merchant account. The interest rates aren’t too bad compared to a bank loan, and the amount is based on your monthly volume. Of course, it’s not for startups with no history, but established business can get $8k-$200k depending on their volume and credit.
I think it’ll be 2-4 years before we see any kind of normalcy returning to the banking industry. It was just a perfect storm of the housing bubble driving prices up, that causing mortgages to be written to anyone who could sign their name, and wall street making mortgage backed securities out of all that bad debt.
Posted by Nick Bentley on January 30th, 2010 9:32 pm
I agree with you Nate rivers , It’s really same to me.
Posted by how to autotrade on February 13th, 2010 5:39 pm
Business cash advances are very popular right now. If your business processes credit cards and you have been in business for over a year, you can take out an advance with a cash advance company and you pay it back with every transaction you make. Ask your merchant account provider if they have a cash advance program available for you.
Posted by phone credit card processing on May 11th, 2010 6:23 am