Many small business owners are floundering in these times. Not only is the economy on shaky ground, but it is still difficult to borrow money from some institutions. This is because banks have tightened their regulations and are worried about the ability of their borrowers to pay them back. Not only that, but government loans have also all but vanished for many small businesses. This has put a lot of small business owners in a bind. Many small business owners, desperate for capital are turning to private lenders. This can be to fund projects, or just to make payroll or buy inventory. Here are the best four private lenders for small businesses.
Capital Business Credit
One such business is Capital Business Credit, they lend to companies in all areas. They make their money by charging a higher percentage rate on the loan than a bank would. This is because the risk involved is ultimately a little higher for companies right now. At Capital Business Credit, once the borrower has established a relationship with the bank, they can borrow money at lower rates.
An interesting trend for smaller loans, websites like prosper.com have popped up. Prosper is a marketplace that matches people who have money to loan to potential borrowers. The borrower would list the reason for needing the money and the amount, and the terms they are looking for. The lender can then either deny or accept the proposal, and then give them a loan. There is a rating system and background checks to avoid fraud. This is a great way for people who have no other option or who do not need thousands upon thousands of dollars to fund their business.
Small Business Association
The SBA has loan programs available for small businesses. This might be a microloan, or a loan for a certain type of business or in a certain area. The best way to inquire about a private loan with the SBA is to contact them directly. Most cities and counties have separate organizations that can assist you with regards to the area you live in. The SBA is a great organization that can help guide you through the process and answer any questions you may have.
There are a lot of trade associations that can connect small business owners with great private lenders. You would need a solid business plan, but if you do, this could be a great route. Trade associations are going to be very familiar with your business idea and the viability of it. There are national and local groups that can help any small business owner.
Finding a loan right now may be tough, especially if your business is new and you have very few assets to back it up. But all you have to remember is to be prepared. You should have a reasonable business plan written out and a list of assets you currently have, along with a printout of your credit report. Not only that, if you are making some money, bring along any evidence of your profits. Getting a loan in this environment is tough, but not impossible. Remember to be armed with as much information as you can provide.
Nicole Meritt writes about finance, commerce & finding affordable coverage at businessinsurance.org.