Over the past several years, many small business owners have reported considerable frustration with their inability to obtain a loan that would allow them to expand in some appreciable way. This problem has been recognized by many experts, and considerable efforts have been made to boost availability of such financing, including yet another effort from the U.S. Small Business Administration that was recently announced.
The SBA has once again rolled out new rules that are designed to make it easier for small businesses across the country to more easily apply for and receive financing, both by relaxing some restrictions and eliminating others altogether, according to a report from The Washington Post. In addition to making it easier to submit requests for and obtain the loans, the agency is also making it easier to pay them back.
How will it work?
In general, these changes apply to the SBA’s most popular loan offerings, and thus are designed to significantly broaden access to such financing, the report said. One of the ways in which this will be done is by eliminating the so-called wealth tests that used to come with all SBA loans, requiring an applicant to disclose information about not only their companies’ financial standings, but also their personal situations. The agency notes that this rule was rarely used to disqualify applicants anyway, but eliminating it will help to make such credit more readily available.
Moreover, the SBA no longer demands that entrepreneurs seeking 504 loans – typically reserved for commercial real estate and equipment purchases – put up whatever they buy with those funds as the collateral in the loan, giving more flexibility to those companies which have the ability to provide other types of collateral instead. Finally, those 504 loans used to have relatively short periods of time in which everything had to be organized or completed (nine months), but that rule, too, has been eliminated.
Owners who are trying to shore up their enterprises’ finances ahead of applying for a loan so that they’re more attractive candidates for lending might want to consider the benefit of shopping around for more affordable small business insurance. Doing so, by finding lower-cost general liability insurance, for instance, might help them to save thousands of dollars every year which can then be used to improve various other aspects of their companies.
