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Small business loans still scarce
Small businesses looking to grow say they’re running into challenges when they seek financing: Loans are harder to secure, and sometimes are more expensive than before the recession.
Lenders say they want to do deals but that many businesses are hesitant to take on more debt. They acknowledge their standards are strict in the wake of a devastating financial crisis and tougher regulations. And some say they’re taking fewer risks.
One recent study found just 30 percent of small businesses that wanted credit would qualify for traditional or Small Business Administration-
Small businesses power the economy, with firms smaller than 500 workers employing half the country’s private-sector workforce. Those businesses experience greater job losses when the economy sheds jobs, partly because of their dependence on the larger firms they serve. But when the economy gains jobs, small businesses tend to lead.
Firms with fewer than 500 employees have seen gross employment rise an average of 8 percent since the recession ended, compared to 3 percent for larger companies, data from the U.S. Bureau of Labor Statistics show.
MultiFunding Chief Executive Ami Kassar said banks should be doing more to help small businesses expand.
“If you’re one of the fortunate few who has equity left in your house, buildings, equipment, you can get some really wonderful, super-cheap loan rates,” he said. “Unfortunately, if you’re one of the most not in that situation, there are options, but it’s pretty expensive.”
That’s keeping some companies from borrowing money, Kassar said.
“I don’t think it’s for lack of demand,” he said. “That’s baloney.”
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