Despite bailouts and legislation, the economy seems to be responding at a snail’s pace, if at all. Small and medium-sized businesses continue to miss loan repayments and relinquish collateral, despite the best efforts of tax payers and a thus far understanding federal government. But as one of the primary banks will demonstrate, the small business loans environment threatens to sink deeper into melancholy.
Delinquent Loans: Businesses Under Pressure
Reuters summarizes the current financial atmosphere by relaying some grim statistics. The firm reports that the level of moderately delinquent accounts rose to 4.45 percent in January--accounts in serious delinquency rose to 1.29 percent. What’s more, the stress from the downturn in commercial real estate is creating additional havoc across markets.
Lending According to Wells Fargo
A recent report of expected loan trends from Wells Fargo paints an even bleaker picture of small business loans. Scrutiny and risk-assessment of traditionally safe investments will prevent many from realizing financing. Real estate or equipment-based loans have the potential to dry up considerably. And cash flow loans may become a thing or the past, save for a few specific situations.
Explore the Alternatives
Fortunately for those considering a start-up or expansion project, small business loans aren’t the only options for financing. Vendorseek reminds entrepreneurs of the merchant cash advance--a form of financing that holds a collection of benefits not found in traditional loans. Credit scores and collateral are irrelevant. All that’s typically required for service is a history of sales.
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