CHARLOTTE, N.C., May 23, 2016 /PRNewswire/ -- It is not just the smaller businesses who are frustrated; even larger, more established companies continue to have trouble getting corporate financing. More and more, they are turning to alternative, hassle-free sources of working capital for 'Main Street' business owners.
"We have also noticed that the average proceeds from a business loan have risen from $50K to over $600K in the last couple of years," stated Mark Hurst, Vice President of BLS Finance LLC. Since the banking crisis in 2009, traditional bank criteria for company financing have tightened, making it more challenging for established companies to get business loans. "Many of the requests for commercial loans are from companies that expect their business growth to exceed 30%, but are having trouble obtaining a cash advance to secure new contracts," said Hurst.
Hurst was also quoted as saying the company "noticed that many of these companies were working with business loan brokers who steered them to the wrong financing solutions for their particular situation," depriving the owner of the flexibility needed to obtain further corporate financing and continue their expansion.
A Long-Term Outlook
Most companies expected that once the economy recovered and the traditional banks stabilized, they would welcome back small business owners, certainly the larger ones. But that has not materialized. The percentage of all U.S. bank business loans of less than $1 million has declined from 52% in 1998 to just 26% in 2015.
Commercial Lending to small companies carries a higher risk and is less profitable for banks than with larger companies. Much of a bank's costs are the same whether it lends $10,000 or $5 million. As a result, banks will continue focusing on the most creditworthy borrowers and steer away from riskier loans. Alternative lending is filling a tremendous credit gap and offers many different business loan solutions. As the industry continues to grow and hone its underwriting ability, it should serve that role even more effectively.
For more information email Mark Hurst at firstname.lastname@example.org a provider of specialty loan products for businesses in all 50 states as well as Canada and Europe.
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SOURCE BLS Finance LLC