While many polls over the course of the year illustrate how optimistic small business owners across the country may be about their chances for future success, one of the truest measures of this anecdotal data comes in the form of how they move financially. For instance, if these entrepreneurs aren't taking out loans en masse, it may be an indicator that many are reticent to take on additional financial obligations for fear of what that might do to their bottom lines if their companies don't succeed in the immediate future. And these days, that concern seems more or less non-existent.
Over the course of 2015, a large and growing number of small businesses across the country took out loans with either local lenders or the U.S. Small Business Administration, as a means of helping to grow their companies significantly, according to a report from the Southwest Times Record. In fact, interest in such financing was so great this year that the SBA hit its limit of $18.75 billion in lending by July and had to wait for approval on even more lending from Congress. In all, the SBA extended some 63,000 loans worth a total of $23.6 billion, in terms of just its 7(a) loans.
Why is that significant?
These are huge numbers for the SBA and small businesses nationwide, the report said. The number of loans being extended was up 22 percent over the 2014 fiscal year, and the dollar value increased 23 percent, potentially showing a greater appetite among entrepreneurs to take on more financing.
In addition, the slightly larger loans in the SBA's 504 program became a little less popular, the report said. But while originations of these loans dropped 1.6 percent to 5,787, the dollar value of the smaller number of loans actually increased 2.4 percent, to $4.3 billion from 2014's $4.2 billion.
Good for lenders too
Meanwhile, lenders also say that they're seeing better performances from small businesses in terms of paying back their loans, and are therefore more likely to open the coffers when these companies seek financing, the report said. As long as these companies appear to be in good shape financially, they are more likely to be approved for larger loans these days.
"There's just more zeroes on the end of the number," Jim Fourmy, vice president of loans at First National Bank in Fort Smith, Arkansas, told the newspaper. "Whether it's a big loan or small loan, the questions are always going to be the same. 'How much do you want to borrow? What are you borrowing it for? And how are you going to pay it back?'"
Of course, smaller companies that want to work with a community bank to secure financing would be wise to also draw up a reasonable financial plan that will help them to better chart their roadmap for future financial success. This will both ensure that they'll be approved for such lending, and also that they're going to remain in good shape for years to come.