Finance & Lending

 

05 22 2013

05 22 2013

Small Business Owners Face Tougher Time Securing Community Bank Loans

As small business growth is essential to an expanded workforce and a healthy economy, entrepr­eneurs who need to borrow funds may want to con­­­­sider pursuing an alternative lender to secure a small business loan as banks continue to underserve smaller firm clients.

Smaller banks tightening lending to business owners

According to Bloomberg, U.S. community banks are using stricter standards when it comes to lending money to small business owners and this is having a negative impact on hiring growth. Data from the ADP Research Institute recently showed U.S. small business owners only increased their labor force by 3.8 percent between February 2010 and April 2013, whereas larger companies were able to increase employment opportunities by 8.6 percent during the same time period.

The reason for a slower hiring rate among small businesses is likely due to the difficulties smaller enterprises encounter when getting approved for funding, as lack of finances means employers cannot afford to expand their payroll or train new workers.

According to a Federal Reserve Bank of Atlanta small business survey from third quarter 2012, 41 percent of small business owners who have been in operation for less than six years were not able to acquire funding for their enterprise. In addition, 36 percent were able to secure some financing, but did not get the amount of finances needed.

Community banks struggling after recession

One of the reasons banks are being more cautious when it comes to lending are low interest rates, Bloomberg reported. Smaller profits from interest make it more difficult for banks to rebuild equity, and thus, rethink their lending options.

Many smaller banks have been struggling since the economic recession in 2008. According to the FDIC, 11 percent of lending institutions with $100 million to $1 billion in assets did not make a substantial profit during fourth quarter 2012.

The slow growth is having the most detrimental impact on small business owners, as tighter lending standards result in higher rates of rejection for newer entrepreneurs.

“If community banks are on shaky ground and unable to extend credit, the small businesses won’t be able to expand their operations and payrolls,” said Mark Zandi, the chief economist at Moody’s Analytics​, told Bloomberg.

Although small business owners may want to hire employees, a lower rate of loan approvals prevents many from doing so, which contributes to a stagnant economy.

As community banks exhibit more caution when it comes to lending, owners who would benefit from a working capital or small business loan can contact an alternative lender like National Funding to learn about the financial options that will provide them with the foundation needed to build their business and expand their workforce.

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General Acceptance

Any applications submitted electronically shall have the same force and effect as if the application bore an inked original signature(s). The above information, together with any accompanying financial statements, schedules, or other materials, is submitted for the purpose of obtaining credit and is warranted to be true, correct, and complete.

 

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To help the United States Government fight terrorism and money laundering, Federal law requires us to obtain, verify, and record information that identifies each person that opens an account. What this means for you: when you open an account, we will ask for your name, a street address, date of birth, and an identification number, such as a Social Security number, that Federal law requires us to obtain. We may also ask to see your driver's license or other identifying documents that will allow us to identify you.

 

For Loan/Merchant Services:

The Merchant and Owner(s)/Officer(s) identified in the application (individually, an “Applicant”) each represents, acknowledges and agrees that (1) all information and documents provided to National Funding, Inc. (“NF”) including credit card processor statements are true, accurate and complete, (2) Applicant will immediately notify NF of any change in such information or financial condition, (3) Applicant authorizes NF to disclose all information and documents that NF may obtain including credit reports to other persons or entities (collectively, “Assignees”) that may be involved with or acquire commercial loans having daily repayment features and/or Merchant Cash Advance transactions, including without limitation the application therefor (collectively, “Transactions”) and each Assignee is authorized to use such information and documents, and share such information and documents with other Assignees, in connection with potential Transactions, (4) each Assignee will rely upon the accuracy and completeness of such information and documents, (5) NF, Assignees, and each of their representatives, successors, assigns and designees (collectively, “Recipients”) are authorized to request and receive any investigative reports, credit reports, statements from creditors or financial institutions, verification of information, or any other information that a Recipient deems necessary, (6) Applicant waives and releases any claims against Recipients and any information-providers arising from any act or omission relating to the requesting, receiving or release of information, and (7) each Owner/Officer represents that he or she is authorized to sign this form on behalf of Merchant.(8) I consent to receive direct mail, faxes, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (9) this request is for business and not for consumer purposes.

 

For Equipment Services:

I hereby certify: (1) the information provided is true and correct, (2) you are hereby authorized to investigate all bank, credit, and trade references, and said references are hereby authorized to release any requested information to you or your nominee, (3) such authorization shall extend to obtaining personal credit profile in considering this application and subsequently for the purposes of update, renewal or extension of such credit or additional credit and for reviewing or collecting the resulting account, (4) this information may be transmitted by us to you and by you to underwriter(s) for the purpose of granting me credit, either electronically or manually, and that by submitting this application, I take full responsibility for transmission thereof, (5) I am over 18 years of age, (6) I acknowledge my rights under the Fair Credit Reporting Act, (7) I consent to receive direct mail, faxes, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (8) this request is for business and not for consumer purposes.

The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status or age (provided the applicant has the capacity to enter into the binding contract); because all or part of the applicant’s income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. If for any reason your application for business credit is denied, you have the right to a written statement of the specific reasons for the denial. To obtain the statement, please write to National Funding Inc., 9820 Towne Centre Drive, San Diego, California 92121.  Funding amount and credit approval is subject to a full credit profile review.