Capital Resources for Small Businesses

 In conversations with small business lenders, it’s common to hear statements about there being “plenty of money to lend, but a lack of qualified borrowers.” With access to capital being a top issue for small business owners nationwide, there’s certainly no lack of demand. Businesses that would not only service debt if the opportunity were extended, but would also grow and expand, boosting our local economy as they thrive.

If businesses who can repay are not able to qualify, however, then the issue in lending is not simply a lack of qualified borrowers to lend to.

While traditional underwriting standards often favor well established (often larger) businesses, there are several nonprofit microlenders in the Louisville region with products specifically designed for small businesses. The Growth Loan, for example, requires no financial collateral or minimum credit score.

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Many commercial loan products on the market today are not designed with the hustle of small business owners in mind. Ones that are, primarily online lenders, rely heavily on high-interest rates to provide fast loans based on little information and require daily or weekly payments.

While larger teams and more formal financial reporting is the long-term goal of small business owners, the challenge of collecting useful underwriting data from small business owners can be overcome by narrative-based collection methods. By deploying a number of innovative strategies to glean data, including a Q&A style survey that mirror questions that loan committee members are likely to ask, the Growth Loan uses a storytelling approach that yields far more than financial data.

The Growth Loan’s approach is rooted in a desire to know the applicant and business in a way that is more accurate than their credit history. Dozens of businesses who are successfully paying back small loans were once unable to qualify for traditional loan products. Businesses in Jefferson, Scott, and Floyd county with at least one year of business history are eligible to apply for up to $35,000. To learn more about the Growth Loan, visit www.growthloan.org.

Janet FlaughBlog