In the U.S., there are nearly 28.8 million small businesses. They account for about 48 percent of the private workforce, according to data from the U.S. Small Business Association. While seen by most economists as the backbone of our economy, these same businesses are often at a disadvantage when it comes to borrowing. Why?
In short, too many big banks are still behind the curve when it comes to modernizing their lending processes, including the ways in which they ascertain the true value and growth potential of a business. A new book on small business valuation estimates that nearly 67 percent of small businesses are under-financed – if they can even get a loan.
How did this happen?
Following the 2008 financial crisis, banks became more risk-averse and regulatory changes also forced them to convert capital and make fewer higher risk loans. When combined with an already heavy reliance on FICO scores and the income statements of the business owner or major shareholders – important metrics, to be sure, but not the only ones that matter – small businesses found themselves subject to much higher collateral requirements that priced them out of the lending game, sometimes unfairly.
The economy can only grow when hard-working employers can obtain the funds they need to expand and hire. Here at Bank of George, we are committed to efficiently marrying our supply of available funds to the borrowing needs of the small business community. Our small business loan application process is fast, simple, and fair. We offer a variety of loan types, including specialized SBA programs. And we are committed to dealing fairly with businesses based on their real value, their real ability to repay loans, and their real capacity for growth.
While we must of course mitigate risk, we are able to do so efficiently by having a more detailed understanding of a businesses’ valuation, revenue, capital, and collateral. As we celebrate our 10th year in business, we are proud of our growth in recent years – and the personal touch we bring to each and every transaction.