Much has been reported in the news to suggest that the availability of outside financing for small businesses has tightened or dried up completely. But this is not the case. Financing does still exist for companies with a solid performance and longevity; small business owners just need to know where to look. Credit unions offer some of the best opportunities because they can be flexible with their lending options, which is a benefit for small businesses.
If you are looking for small business funding, you should consider these options:
1. SBA 7(a) Loans. This is a federally insured loan program designed to help small businesses that have no alternative funding available. It provides some flexibility considering terms to custom fit the business needs. To be eligible a company must be a small business as defined by the SBA and meet all requirements.
2. SBA 504 Loans. If you are interested in commercial real estate this is an option for you. Again, SBA compliance is a must. SBA 504 allows a smaller down payment for the borrower which allows more reserve for cash flow. Usually there is a very competitive interest rate for the SBA portion of the loan, which is fixed for the entire life of the loan.
3. Corporate Credit Card. In some cases, the entire line of credit can be used just like cash with the same interest rate applying, whether you use a cash advance or a credit card purchase.
Borrowers need to explore all their options. Remember that good companies are definitely going to make it through the tough times and credit is still available for small businesses that are in a healthy financial position. Entrepreneurs will need to stay nimble during this time and be wise when it comes to finding additional funds for their businesses needs.
Assistant Vice President of Business Development
Family First Federal Credit Union