According to new data gathered by Small Business Administration (SBA), A lot of U.S. entrepreneurs are struggling when it comes to getting needed capital.

SBA loans, issued through banks, are intended to help small businesses grow. Part of the loan is backed by the federal agency in the event the borrower misses a payment, reducing the risk to the financial institution.

The Small Business jobs Acts of 2010 went into effect October 1, 2011. One of the main purposes of this law is increasing the new loan limit from two to five million dollars. This increase in the loan amount has, unfortunately for small buisnesses, made actual small business loans less attractive to banks. As a result, small businesses are much more likely to be overlooked as larger and more stable businesses taking out larger loans get favored status.

Because banks are now favoring larger loans this creates serious financing problems for small businesses

According to an SBA loan analyst it takes the same amount of time to underwrite a small loan, including analysis and documentation, as it does for a large loan.  Obviously banks going for more profit are going to prefer the larger loans which net them larger profits.  Because of this, the small business is once again getting shafted.

Technorati Tags: banks, small business, greed, money, business

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