For many New Jersey businesses, financing is essential. This is especially true for a new business. However, a recent poll conducted by the Federal Reserve Bank of New York suggests small companies in the tri-state area are struggling to secure sufficient financing, specifically microloans.
The Federal Reserve Bank of New York's latest Small Business Borrowers Poll surveyed hundreds of small companies in New Jersey, New York and Connecticut. Typically, the surveyed companies had less than 10 employees and fewer than $5 million in rev enue per annum.
Based on the poll's results, many small businesses have been discouraged by difficulties securing financing. However, even when they get financing, they usually only get part of what they ask for.
The poll results support recent Small Business Administration numbers. Those figures show that small-business loans in 2011 were much lower compared to the 2008 peak. In addition, national statistics indicate that small-business loans --that is, loans of no more than $1 million-dropped another 4.7 percent between 2010 and 2011.
Though the financing market is tighter than usual for small businesses, companies can do some things to enhance their chances of securing financing when they need it. For one, age helps. Creditors feel more comfortable lending to established businesses as opposed to start-ups.
Similarly, a strong banking history may help a business as it competes for limited financing. To help one's business develop a strong relationship with creditors, it may make sense to establish a financial history with creditors before the business needs funds.
Even if a business has not been around a long time, all is not lost. Strong sales performance can usually make up for a company's youth.
Source: NorthJersey.com, " Borrowing tougher for area's small businesses," Linda Moss, Aug. 14, 2012