A new hope for small businesses
A new hope for small businesses
After the financial crisis has broken in the United States in 2008, the larger banks have held the majority of the shares over small business loan markets. According to the Small Business Administration’s data, the market shares they held is slightly over 39 percent in 2005 and rose up to 39 percent in 2009. But these past two years have not been as good for these large banks as their shares fell to 38 percent last year.
Though it is currently still too early to tell whether the drop was due to the problem in the sales of the big banks, or if the financial state of the economy is going back to the way it used to be; but it is very good news for the owners of small businesses. With the big banks losing their grip on the sales of the industry; this means that they no longer dictate who gets a loan and who does not.
It is no secret that your bank credit is your ticket to expanding your business. Almost one-third of businessmen come to banks for loan in hopes of making their business grow, this is according to the new Census data. Though businesses seem to have increased independence on credit cards, the bank loans are still much larger compared to credit card loans.
The value of loans in smaller banks has decreased by 19 percent between 2008 and 2011, and they greatly need to re-evaluate their market shares. But it is still easier for consumers to borrow from these banks compared to large banks because they do not focus on credit scores of applicants and the businesses’ financial statements and they can be open-minded to small businesses compared to big banks.
These financial institutions according to the 2004 Journal of Financial and Quantitative Analysis study are more reliant on the character and relationships of the applicants and business owners. Though big banks may have more perks when they loan money, but business owners would turn to small banks because more often than not, they would give the amount of money the business needs.
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Filed under: Business Loans • Loans • loans for people with bad credit
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