According to a new study by the National Federation of Independent Business found that there is a rift between the lenders and small businesses when it comes to view regarding credit available. While lenders feel credit standards need not change, small businesses and their owners feel credit standards have tightened in recent history.
The NFIB numbers showed general support of the entrepreneurs, and not the lenders. More small businesses were out to find credit in 2011 than in 2009 (immediately following the recession crunch) but the same number of individuals were able to get loans as in the latter year. The study was able to infer the credit standards were thus stiffened to make it harder to attain loans.
Entrepreneurs were essentially able to renew loans and find lines of credit for new loans than before, according to the study. Small business owners were increasingly employing personal cards rather than business cards for that reason.
Crowdsourcing, as opposed to traditional lending, became the preferred method of obtaining loans. Jumpstart Our Business Startups Act of 2012 made it easier for entrepreneurs to find the capital they desired through crowdsourcing. Because of the new law that enabled individuals to give smaller structured financial support, companies were able to avoid the stricter Securities and Exchange Commission regulations.
Banks still remain generally cautious about lending to entrepreneurs. Government programs have attempted to ease some of the grip of lenders on their capital, while still there are less ways to use the money compared to years past. That may be part of the reason why micro-lending and crowd sourcing has taken on so much importance for many small businesses.
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