In an article this week from Bloomberg, some economists and bankers lament the recent slowdown in commercial and industrial loan originations for businesses. What started as an optimistic year for business sentiment seems to have cooled somewhat, even though the same article cites a survey indicating that consumer confidence has jumped to its highest level in 16 years. Although the article does mention the widening disparity between “soft” economic data (surveys), and “hard” economic data (government studies and research reports), at SBF we believe this misses the point, at least for the small business owners we talk to on a daily basis.
In our experience, there always seems to be demand from small businesses for loans at or under $250K. And we can always seem to find lenders willing to originate those loans. And, where a traditional bank will tighten up their underwriting requirements from time to time in an effort to mitigate their risk or maintain a healthier balance sheet, the alternative lenders we deal with are actively looking to fund more deals.
Since we are funding smaller amounts, over shorter terms, we are able to originate loans that a bank would not look at. The credit requirements are not as strict, along with the time in business, industry, use of funds disclosures, collateral requirements, etc. Where a bank may take several weeks to fund a loan from application to receipt of loan proceeds, our lenders may take a few days, or less.
Obviously its not quite that simple…for the speed and ease of funding, and the relaxed underwriting requirements, the rates will be higher. And the terms shorter. Still, in many cases alternative lenders provide a viable alternative to the traditional bank loan. Things move fast in business, and there is not always time to shop around at banks for the best possible, lowest rate, shortest term deal. At Small Business Funding it is our mission to make you, as a small business owner, aware of all the options at your disposal.