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Why is bank financing so difficult to get right now?

Even though it’s easier to get financing from a bank than in previous years, it’s still not easy to acquire in a technical sense.

One metric used to analyze the state of lending for small businesses, according to this blog post, is the total value of both commercial and industrial loans of less than $1 million.  In Q4 of 2012, that post notes, the value of these loans was 78.4% of the value of the same loans in Q2 of 2007.  And, even though 100,000 more small businesses sprouted up during this same time frame, the post continues, the total number of these loans dropped by 344,000.

So it’s clear this process is happening, but what’s fueling it?  Several factors:

1.     Bankers Say It’s the Small Business Owner’s Fault

It’s no secret consumer demand and spending has slowed when compared to pre-recession levels.  Because demand for business’s products and services has been soft, they haven’t approached banks to receive financing as frequently as they did before the recession.

2.    Small Business Owners Blame Bankers

Small business owners, on the other hand, find fault with bankers for forcing them to have more collateral on hand, and narrowing their services to focus less on small business lending and more on lending to larger, established companies.  They also fault those in charge of regulating banks and their lending practices for making loans harder to acquire.

3.    Banks Can Lend More But…

They want to reduce their risk.  An article at Forbes notes banks have “excess funds” they’re not willing to lend to anyone except for high quality borrowers.  As a whole, banks are fighting for the business of a smaller pool of good companies.

4.    A Reactionary Approach is All Too Common

Unfortunately, the fact of the matter is the effects of the Great Recession are still clear in the memories of bankers.  They’re doing what’s natural to most of us – playing it safe until things appear to be comfortably on the right track again.  The reality is lending standards won’t begin to loosen until this happens – so what can small businesses do in the meantime?

How Small Business Can Access Financing Right Now

As long as your business does at least $10,000 in sales per month, has been in operation for at least 12 months, and has no open bankruptcies, you have a good chance of receiving financing with Reliant Funding.

You can get up to $500,000 per location, only have to fill out a one-page application, don’t have to pledge any assets, and can have your funding in hand in as little as 3 business days.

Learn more about Reliant Funding’s small business loans or call 877-850-0998.