As a small business, you may need financing to pay for inventory, overhead, business property and the other costs of owning and operating a company. However, larger banks may feel better-suited for corporations and larger enterprises. Where can a growing business go to secure the services and financing they need?
How to Find Small Business-Friendly Banks
If you run a smaller business, there are several places you can go for a loan:
- Look to Community Banks
Unlike their larger counterparts, smaller financial institutions may be more willing to work with smaller, local businesses. In fact, some specialize in smaller companies. The U.S. Treasury reports that community banks across the nation have increased their financing for small companies by about $3.5 billion since 2010, thanks in part to the Small Business Lending Fund program.
- Look for SBA-Secured Options
The U.S. Small Business Administration (SBA) secures loans. Look for certified or preferred SBA lenders offering these secured loans. While the SBA does not offer loans themselves, financing secured by the agency makes life easier for small businesses, because it’s designed specifically for smaller companies. Preferred and certified SBA lenders are usually very willing to work with small businesses and some even work with microbusinesses.
- Take a Look at Which Lenders Other Growing Businesses Are Using
Take a look at the competition. Where do other small, local businesses go when they need to finance a purchase? Where do other small businesses in your industry turn to for a loan? Often, lenders willing to lend to one business may be willing to lend to other small businesses in the same area or industry.
How to Find Small Business Loans
There are many ways to secure small business loans if you’re a growing company:
- Focus on Your Needs — Not the Needs of Other Small Businesses
It can be tempting to head to a lender just because all other businesses are going there. While it's useful to look at where others get their financing, keep your own needs in mind. Lending is not a one-size-fits-all solution.
- Think Like a Lender
No matter where you turn for financing, all lenders want the same thing: to find borrowers who are going to repay their loan. Before you apply for a small business loan, do your best to build up your business credit and present a strong financial picture for lenders. The stronger your financial position, the easier it will be to secure financing.
- Compare Loans
No matter your situation, you always have some options. Take a look at all possible financial solutions and compare different loans to find the one that suits you.
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