When it comes to the current lending climate for businesses in the Houston area, there’s good news and bad news. On the one hand, traditional financing is still available for many firms hoping to expand their business. On the other hand, past economic events have led banks to tighten the reins on available credit. In other words, lenders have become much pickier about credit scores, collateral, and the need for documentation proving the health of your gulf transportation business. Fortunately, other lending options such as SBA-backed loans and seller financing are available.
Before you even consider applying for a loan, it’s important to put together financial documentation that demonstrates the value of your business, as well as projections about your profitability in the future. Like any company in the private sector, banks are in business to make a profit. They’re not looking to make your life difficult, but for simple confirmation that you’ll be able to pay them back. Unfortunately, many businesses today cannot provide that confirmation. Rising interest rates due to increased regulation have left companies with reduced credit scores, impacting their ability to obtain funding. A business broker specializing in the Houston-based transportation industry can provide an accurate business valuation and the skill set to help you enhance business value, improving credit – and your chances of achieving funding – in the process.
With banks clamping down on credit, the federal government is testing out ways to reinvigorate the business economy. Recently, this has included implementing new Small Business Administration programs. SBA doesn’t make its own loans, but guarantees loans to a bank so that the lender is more apt to assume the risk of making a business loan. Through the Small Loan Advantage and Community Advantage programs, the SBA is currently offering funding of up to $250,000 with an easy-to-understand application process and approval in as little as a day. The idea is to streamline the lending process not just for borrowers, but for small, community banks that have previously been hesitant to make business loans.
Finally, business owners seeking funding for a merger or acquisition may find it coming from an unlikely source – the seller. Sellers may be more willing to act as banks today than ever before. The fact that fewer businesses are eligible for traditional borrowing sources stands to limits the pool of buyers. In order to target a wider variety of companies, those with a business for sale in Houston may be willing to provide financing in exchange for a slightly increased price.
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