Applying for a traditional small business loan from a corporate bank has never been an easy task. The applicant has to fill out a lengthy application, undergo a credit check, submit a business plan, and answer a myriad of other questions regarding the past, present and future plans of the business. Applying for startup business loans requires even more footwork and effort as most banks won’t provide lending to companies that are not established (meaning, have not been in business at least five years). Without considerable collateral to offer up for a loan and a good credit score, many small businesses are unable to secure traditional business loans particularly in the past several years since the 2008 financial collapse.

Sluggish SBA Criticized by Those Seeking Business Loans

The Small Business Administration (SBA), a government institution, was put into place half a century ago to help novice small businesses get financing. They work with the banks to secure such financing as an advocate for the business. Yet the slowness and bureaucracy of the SBA has proved to be no better than the banks themselves for many. The institution has been criticized for being too slow to be effective and also for not performing proper due diligence when supporting small business loan financing.

SBA’s Small Business Loan Program Gains Momentum with New Leader

Yet with a new leader in place and fresh wind in its sails, the SBA recently made some changes to its most widely used 7(a) Loan Program. The changes are aimed to increase the speed in which long term loan applications are processed thereby making them more accessible and attractive to small businesses. Along with this improvement, the SBA will no longer require the lengthy, time consuming financial background checks of those individuals applying for the long-term loan or short-term loan on behalf of the business. In the past, this contributed to the slowing down of the application processing and made some applicants reluctant to even bother.

Apply for a Business Loan from an Invoice Factoring Company

Moreover, the SBA will start accepting other types of collateral for guaranteeing the small business loans. Previously only real estate properties were accepted as collateral and with these changes in place, other assets will be accepted. By working with a bank and the SBA it is believed that applicants may receive lower business loan rates though this depends on a number of factors including credit. Yet outside of banks, small businesses have a number of other ways to secure financing. Some invoice factoring companies provide business loans as well as startup business loans in the same way as the banks. Such small business loans are offered at competitive business loan rates. In most cases, they are available in less time than traditional banks.