The Federal Reserve Bank of Richmond (FRB) recently posted an issue of Marketwise Community, a web publication which highlights community development best practices and emerging issues that impact communities in the southeastern United States. The current issue, New Alternatives in Small Business Financing, addresses small business lending in the wake of the recession. The message – banks started to loosen some lending standards in mid-2010, a year after the recession ended, but loans remain hard to get by historic standards. The good news is that there are some loan products available to businesses in need of working capital.
The Small Business Administration (SBA), a federal agency mandated to increase small business access to credit, refers to three types of nontraditional lending partners along with the examples of the credit products they offer to small businesses. Loans range from $5,000 to $35,000 and can be used to pay short-term debt obligations, free up cash flow to purchase inventory, or provide capital for start-ups.
Small businesses need to be the ones to determine what alternative business sources best match their financial state and funding needs, but Main Street programs can play a critical role to help direct the business owners to the available resources by highlighting them through an e-blast, blog, or an office binder. Consider including the information from this SBA article: Five Critical Steps to Securing Small Business Capital.
As effective partners, both the FRB and SBA provide support systems and tools. You can play a big part in connecting your businesses to these available resources to ensure that your district is performing to its full economic potential.