A lot of companies are looking for last-minute funding to offset shrinking holiday inventory or bring on additional help. Others are trying to start saving for expansion plans in the new year, with economic indicators consistently improving for the last few months making them feel less trepidation. With the financial sector still feeling a bit of the pinch from the recession, commercial loans could be hard for small businesses to obtain, but there are certain strategies to maintain while in the lending market.
Don't mix business and personal
Opening an account for the business is a primary step when first starting an enterprise, and relying on corporate assets to fund company ventures is a key practice that must be upheld. While some may feel tempted to fall back on personal savings or credit, Entrepreneur Magazine warned that this can introduce unnecessary risks.
Nina Kaufman, a business attorney and contributor for Entrepreneur, warned that commingled personal and public funds can jeopardize companies for a number of reasons, including fraud and tax issues. Separate accounts need to remain that way, just as filing for commercial loans should only be applied to a business's financial portfolio.
The Federal Reserve recently released a loan survey showing that commercial loan demand and other small business credit needs were stagnant through the third quarter of 2012. This could either indicate that getting a loan approved is still hard to do, or else that companies aren't asking for money as often.
The Federal Reserve's most recent Senior Loan Officer Survey of Bank Lending showed that availability of funding has not become an issue, as some fears surrounding the fiscal cliff have lead businesses to believe that agencies like the SBA could be disappearing. Rather, as the source revealed, there is simply lessened demand for these financial services.
If a business is turned down the first time for a loan, looking at other banks can help match the right rate and amount with the requesting firm. Rather than going with alternative lending solutions, which can be risky, a report from USA Today wrote that online crowdfunding and other innovative tools can help companies get the money they need right now. It's important for small businesses to remember that these resources aren't guaranteed, so if a stable source of money is what's needed, shopping for a commercial loan is the best option.