The SMB Lending Outlook

SMB lending has been a wild ride over the last few years – and it is has been near impossible to get money from traditional sources. That hasn’t stopped them from pursuing a variety of new options as new data reveals – in fact, SMBs even recently boosted borrowing at the end of Q1 2014.

Small businesses and startups often have a hard time deciding when they should apply for additional financing and what they need to do to be prepared. Lending to U.S. small business market has fluctuated greatly over the past few years, which has made obtaining a small business loan more difficult, however, U.S. small businesses recently boosted borrowing at the end of 2014.

The Thomson Reuters/PayNet Small Business Lending Index, which measures the volume of financing to small companies reached its highest level since March 2007. And a rise in the index is historically correlated with stronger U.S. economic growth a quarter or two in the future. The new levels of optimism and positive economic outlook will lead more businesses to seek funding as they look to take advantage of the growth coming from the small business portion of the economy. There are many factors that signal readiness for growth and they can be difficult for small businesses to track. An alternative financing company, Reliant Funding, has released tips on how to understand when their company is ready for growth. 

CEO of Reliant Funding, Adam Stettner, why they’ve focused on better explaining the steps to recognizing growth readiness saying,  “We want [small businesses] to know when circumstances are right for their company to get financing and expand their operations.  And we make getting business financing simple which helps businesses quickly capitalize on opportunities”.

Reliant Financing outlined the prime indicators for growth in the following situations:

  • Restaurants and bars – To succeed in this business, owners must target a specific demographic.  If the customer in general loves the food and drinks, it may be time to open a second location that sells to the same type of customer. In addition, seasonality could spur business renovations.
  • Auto repair – In this competitive niche, businesses that have consistently been able to make it through the tough times and prosper in the good ones are prime candidates for growth.
  • Healthcare – In order to remain successful, healthcare providers must provide a welcoming environment to patients with state of the art equipment.  If they find that patient’s repeatedly request services that are not currently offered, this could be an opportunity to purchase new equipment for expansion of practice services.
  • Retailers – If a business knows the current customers well, then it may be time to put more money into marketing and renovations.  If certain products are not moving, testing new inventory could be in your future plans.

When to seek financing isn’t always a clear decision,  these tips will help business owners identify when their company has a prime opportunity for growth.