thread Re: In the News: Less Loans for Small Business Owners? in Community Corner

In the News: Less Loans for Small Business Owners?

PessoAlumni — Tue, 16 May 2023 11:45:21 GMT

Hey Sellers,

We’re trying out a new type of QOTW this week: In the News!

This week I ran across this super interesting article about big drops in loan availability across the board, which seems to be affecting small business owners the most. I’d love to hear if you’ve felt it in your business.

US News & World Report: Small Business Owners Feel the Credit Crunch

The article explains how small businesses have been struggling with loans due to a consistent increase in interest rates, making it harder for businesses to pay back. With banks less likely to offer loans, the article shares that approvals have been dropping every month for over 9 months, and down about 50%. They share the example of a pretty successful long-time business getting rejected for a $50,000 loan, despite a history of profit.

Overall it seems like right now it’s a really difficult prospect for business owners who are in a pinch and need some financial infusion.

When I owned my ice cream shop, we didn’t even really try to get loans from a traditional bank. It all seemed too complex and complicated, and we didn’t think we would be approved based on our history. We put a lot on credit cards and dealt with the fees. Towards the end, we did take a few Square Loans which were essential in keeping us afloat through the winters, especially around the pandemic.

I’d love to hear your perspective on this:

If you’ve applied for a bank’s business loan recently, how did it go?
Are you worried about being able to get funding in the future?

Can’t wait to hear your thoughts!
Pesso

Re: In the News: Less Loans for Small Business Owners?

KayMandi23EXP — Wed, 19 Apr 2023 20:20:24 GMT

The best Small Business Loans are through the SBA.gov website. This site is designed to help small business owners. There are 5 different types of tiered loans for small business owners. There are government certified loan companies, taking the worry off of small business owners.

Re: In the News: Less Loans for Small Business Owners?

PessoAlumni — Wed, 19 Apr 2023 20:29:07 GMT

Awesome, thanks so much for sharing, @KayMandi23EXP !

Have you gotten or applied for one of these loans before?

We did the PPP, but that's the only SBA interactions we had.

Re: In the News: Less Loans for Small Business Owners?

Doran — Wed, 19 Apr 2023 22:15:09 GMT

Well, that's crappy news. Honestly, I've found spending a few hours a week researching and applying for grants so much more successful than trying to secure loans. I take Square Loans occasionally when I need them for a project but that has been about it. The SBA process just hasn't been easy to navigate.

Re: In the News: Less Loans for Small Business Owners?

Tamyra_Paunchy — Thu, 20 Apr 2023 13:44:41 GMT

Same. I've applied for lots of grants, but I went through the process of applying for a loan 1-2 times and thought - never again. Incredibly invasive process, very time consuming, and in the end we were either denied or offered an especially high interest rate that would have done us no good long-term. I've gotten grants every year we've been in business so far, so fingers crossed that continues until we reach the point where we don't need them anymore.

Re: In the News: Less Loans for Small Business Owners?

homeprogreen — Thu, 20 Apr 2023 14:16:19 GMT

Haven’t noticed any change in access to loans or credit. I am fortunate that I have been dealing with the same bank for over 30 years and while it’s a mid size bank in the overall banking industry it’s still a local small town branch where everyone knows everyone else. If I need a loan then I just tell them when I am making my weekly deposit and they normally have the approval in a couple of hours and the paperwork ready to sign the next day. It probably helps that I have always ran my businesses as sole proprietor so instead of it being business credit everything is based on my personal credit

Re: In the News: Less Loans for Small Business Owners?

ReginaRMT — Thu, 20 Apr 2023 14:59:18 GMT

I’m in Canada and don’t know about the US states or city business development programs. In my province they have small business micro grants for ie. developing technology into current business operations just for example. Also the government have micro business grants we can apply for through a BD program. As for loans I have never needed to and if I was to even consider a loan I would enquirer about grants. I think most of these go unapplied for.

Re: In the News: Less Loans for Small Business Owners?

SlyTheSpy — Thu, 20 Apr 2023 19:03:12 GMT

Doesn’t really have an impact on my business yet. But it isn’t great news either way. As a startup business with all original products, my business doesn’t meet the minimum thresholds for most business loan programs. That is why everything I’ve done is self-funded.

This of course has its pros and cons. Pros, no debt to carry and no restrictions or burdens on timelines. Cons, not being able to scale the business as quickly as I desire.

Re: In the News: Less Loans for Small Business Owners?

DinaLRosenberg — Fri, 21 Apr 2023 13:17:00 GMT

We recently applied for a business line of credit with Chase and received it. It was our first time doing this as we typically use our AmEx and pay it off.

Our accountant suggested we go for the line just in case we needed it- with the idea that it's alway easier to get it when you don't need it instead of when you really DO need it.

We were lucky to be in a position that the line of credit we asked for was less than what we currently hold in savings... (in Chase- which is why it was easy to get the line).

With that said- I know it's difficult to get a loan no matter what the economic conditions are. I have put together 2 businesses and have always taken the risk and done so in my credit card.

Re: In the News: Less Loans for Small Business Owners?

DinaLRosenberg — Fri, 21 Apr 2023 13:19:53 GMT

Everyone should ready the fine print of SBA loans... my Father took an SBA loan and used his home as collateral.. while you can discharge SBA loans in bankruptcy.. they can still go after your collateral used to secure the loan.

Re: In the News: Less Loans for Small Business Owners?

Headlines1608 — Fri, 21 Apr 2023 16:53:35 GMT

May I ask what types of grants are you getting and from where? I’m a cosmetologist and I wouldn’t know the first thing about finding grants and apply for them.

Re: In the News: Less Loans for Small Business Owners?

Ironbearjewelry — Fri, 21 Apr 2023 20:28:24 GMT

I haven't had this issue but my business is 23 years old. It's a shame this is effecting small businesses. Since that's where all big businesses started at once upon a time.

Re: In the News: Less Loans for Small Business Owners?

PartyManiaMD — Sat, 22 Apr 2023 05:59:26 GMT

It's why you see fewer and fewer small businesses every year.

The SBA gives money to the banks to loan out, the banks want collateral or a high credit score in order to qualify.

I ran into an interesting issue a few weeks ago, I was working with a lender that pulled out after they found out I had started a gofundme in January.

The SBA literally recommends a gofundme or crowdfunding to raise funds as a method of alternate funding.

So basically lenders are denying loans based on fundraising done via sba recommended methods.

I swear small businesses can't win and with rising rent, cogs going up, and labor more competitive I can't see how new businesses stand a chance.

To me it's fascinating that the investors in the US have dumped billions of dollars into unicorns that never turned a profit while the rest of the economy fights for scraps.

Case in point Doordash has lost money and continues to lose money in the hopes of eventually making money but even during their peak they lost money.

I hope some day we can recognize startups are the bread and butter of a thriving economy and putting huge barriers like credit score or collateral in the way limits it to rich people playing.

Even when I compare my journey to when my family first got into retail is a huge change given wholesaler consolidation. Back in the day vendors would fight for our business, offer free inventory fills, free fixtures, heck even free samples.

The same companies nowadays don't offer any of thatm one company wanted $1,500 per card fixture, not even including cards.

Just my 2am thoughts, I feel like the sba and banks could and should do more to actually support small businesses before its too late.

Re: In the News: Less Loans for Small Business Owners?

BarnOwl — Sat, 22 Apr 2023 20:40:17 GMT

In order to get an SBA loan to rescue and renovate the 1870s country store we now run, I had to leverage my farm. It was incredibly risky, but my gut told me this would succeed. It was stressful to say the least. We’ve been open 1.5 years now. Square loans have helped us since all the SBA $ went to the renovation. I use my square $ to reinvest in my biz and those loans have made a huge difference. As my business has grown I am able to pay them off so fast!

Re: In the News: Less Loans for Small Business Owners?

GourmetOnWheels — Sat, 22 Apr 2023 23:48:03 GMT

My bank whom I have been with for 26 years offered me a loan at 12.8% interest

While the savings account pays us 0.01%

Those are loan shark rates.

Now they have been bought by US Bank and the fees are massive.

Time to look for a new bank

René

Re: In the News: Less Loans for Small Business Owners?

lecouturenails — Sun, 23 Apr 2023 04:50:22 GMT

what kind of grant i haven't applied for any kind of grants. pls let me know thanks

cristina

Re: In the News: Less Loans for Small Business Owners?

PessoAlumni — Mon, 24 Apr 2023 16:43:47 GMT

Thanks so much for sharing, @GourmetOnWheels !

Yea, that's a pretty intense rate! Super interesting that they were bought out and raised their fees. It makes sense, but definitely hard on the folks who were bought into one thing and now it's completely switched around and you can feel stuck.

Let us know if you find a better bank!

Re: In the News: Less Loans for Small Business Owners?

PessoAlumni — Mon, 24 Apr 2023 16:45:13 GMT

Thanks for sharing, @BarnOwl .

Wow. That does sounds super scary and risky to put your farm on the line for it. Those are some intense terms.

But that's amazing that you followed the gut, pushed through the stress, and are making it through thanks to business growth. So happy for you and sending you all the good vibes for continued sales and profit and payoffs!

Re: In the News: Less Loans for Small Business Owners?

PessoAlumni — Mon, 24 Apr 2023 16:46:32 GMT

Congrats on making it so far and so long -- That's a huge accomplishment, @Ironbearjewelry !

That's a really good point -- when small businesses suffer, the whole economy can be affected.

Re: In the News: Less Loans for Small Business Owners?

GourmetOnWheels — Mon, 24 Apr 2023 17:45:26 GMT

@PessoAlumni I went to Relay for Profit First that is am starting next week. Now I need a bank for my wife.

René