As we enter 2013, there are several schools of thought in the lending community regarding access to capital and what may or may not happen with small business lending in 2013. One of the problems in making a clear prediction is the number of different sources providing numbers and specs, such as the Small Business Administration that only releases numbers related to SBA backed loans. Alternative lenders are not in the habit of releasing performance numbers at all. All of this makes it difficult to determine exactly what is happening, but based on past performance, it is possible to glean a few ideas for the future.
For those trying to start a new business, going to a bank for financing is almost a dead end. It has been this way for the past couple of years and is not expected to changes. Franchise outlets on the approved SBA list, or individuals with solid collateral sources may still have a chance, however.
Throughout 2012, many of the problems associated with financing startups resulted in the focus being put on one possible solution, the concept of crowdfunding (sort of a Kickstarter for the executive set). While it hasn’t caught on yet, chances are very good that it will in 2013. It is simply a matter of working out the problems and figuring out how to make it work most efficiently and walk the fine line between helping companies and protecting investors.
If there is some good news, it is for existing businesses with good credit. This has been a good time to borrow money at low rates for the expansion of your business. Banks are always open to borrowers with solid financial backgrounds.
Unfortunately, there aren’t enough banks to take care of the demand, which is why an increasing number of alternative lenders are cropping up across the country. Companies such as LeaseQ that provide a number of equipment financing and leasing options, with almost immediate approval online are enjoying tremendous success. This industry is expected to see rapid growth throughout 2013, and are leaving the banks in their dust with their speed in the process and use of cutting edge technology. Backed by investment banks and Silicon Valley venture capital sources, these new lending sources are providing a much needed access to capital that was previously unavailable.
Larger banks continue to talk about their small business lending records, but the numbers do not back up the claims. These institutions simply are not prepared to deal with small business lending on any meaningful level, although community banks continue to be friendly to small business and relationship banking continues to be a major element.