Historically, the worse the recession; the better the recovery. While many businesses have weathered the recession to emerge with restored financial vitality, business growth and lending levels continue at curbed levels. Roughly half of business owners say they need capital for a variety of business reasons ranging from growth funding to restructuring their balance sheet, according to the Pepperdine Private Capital Access Report from Q2, 22013 (Everett, 2013).
Even with historically low interest rates, owners are holding back on investing. Perhaps risk adverse owners are blinding themselves to the opportunity costs of passing on new initiatives. Yet, the hidden costs of not planning for the future – and undertaking initiatives like investing in innovation, taking advantage of a real estate purchase, or expanding into new markets – can be significant.
For many business owners, the process of matching financing needs to capital options is overwhelming and requires time-consuming assessments of approval requirements, loan parameters, rates, terms and risks. It may appear that lending options are not available for their particular need, but they may be overlooking a key resource. For decades, the Small Business Administration (SBA) has worked through banks to help businesses take action: to acquire, to restructure, to invest for greater efficiency or to lower costs.
Increasingly, SBA loans are emerging as a “go-to” financing source. 1In fact, in 2011 and 2012, the SBA posted its largest-ever loan volumes with over $30 billion in loans during 2012. These loans provide affordable access to capital with the benefits of working with your local banking team. Continuing improvements to SBA loans make them a source that offers key advantages over “conventional” sources of financing, including a broader range for use of funds, substantial flexibility around eligibility and a full suite of products to address many business needs.
The SBA loan process has improved over the years. Updated processing and paperwork systems mean that more than 80 percent of applications are processed online, and many banks offer dedicated teams to help business owners compile the required financial documents to gain approval quickly and easily.
To take advantage of these benefits, owners need to ask a trusted banker about their SBA lending expertise. Many banks offer SBA experts that know the ins and outs of all types of SBA loans with a thorough understanding of how SBA loans support unique business owner situations. These SBA support teams are prepared to match SBA loan capital to business owner needs. The combined benefits of more flexible SBA options and streamlined applications make SBA loans a go-to financing option that should not be ignored. The opportunity costs of not taking action on future plans are often significant and avoidable with today’s SBA programs.