As cliffhangers go, the Fiscal Cliff was a colossus. Congress as a whole was teetering on the edge of the abyss, dangerously close to overbalancing. A last minute reprieve brought us back from certain death. Having said that, how will this affect Small Business?
When this topic was last addressed, the major concern for Small Business was an increase in taxes, which would have taken a major bite out of any profits available for expansion. Merchants were concerned about having to raise prices just to stay afloat; and forget thinking about a loan for expansion! Most small business owners were worried about the need to retrench and having to lay off employees. Fortunately congress, in a rare moment of lucid nonpartisanship, barely avoided the cliff and pulled us back into the realm of a rational economy.
The good news is that the economy is back on track and reports have consumer confidence at an all-time high and looking great for this New Year. According to one headline -“Wall Street Increasingly Bullish About 2013” – suggests the New Year brings a promise of positive things to come. 2013 is definitely shaping up for business expansion. According to one tax preparer, “I don’t hear as much about where the economy is heading anymore. I think that right now, from my clients’ point of view, we have seen upticks in the economy (and) their businesses are doing better this year.”
Unfortunately, into each business life a little rain must fall. That rain comes in the form of a crucial lack of financing available to Small Business Owners. Banks are still contending with the fall-out from the real estate debacle and having to deal with much more stringent policies and requirements for making loans. Small business lending has decreased dramatically since 2008. Banks are currently approving only 10% of applications submitted and that only to companies with impeccable credit. After the 2008 disaster and as part of the Obama stimulus measure, SBA lenders increased their guarantees on loans from 75% to 90% of the total loan. Unfortunately this provision expired in 2011. Still a 75% guarantee on a loan carries a lot of weight to lending institutions, but SBA lenders also require good credit and a whole list of requirements which must be adhered to.
Another option is becoming a member of a Credit Union. These organizations tend to be more lenient to their members when making a loan, but still require decent credit as they also must insure the safety of their other members’ money.
So, now that we have survived the Fiscal Cliff, if you feel your small business wants to consider expansion and could benefit from an influx of cash, contact the Underwriting Specialists at Liberty Capital Group, Inc.