Small businesses are the lifeblood of any economy, creating wealth and employment opportunities – and supporting economic growth at grass-roots level. This type of entrepreneurship has always been valued in the United States, where the founders of startups can aspire to become leaders of Fortune 500 companies if they hit on a successful niche.
But are small business owners being unfairly hampered by the raft of regulations introduced following the financial crisis of 2008? It’s an issue that’s hitting the headlines at the moment as President Trump reaffirms his pre-election promises to de-regulate the financial services industry.
For a society that runs largely on credit, when loans start drying up, the wheels of commerce grind to a shuddering halt.
In a survey recently conducted by the Federal Reserve, signs are emerging that lines of credit are being increasingly squeezed, with loans to businesses on commercial and industrial (C&I) and commercial real estate (CRE) being subject to tougher standards over the second quarter of 2016 than in the past three quarters.
Businesses looking for C&I loans to buy new equipment or relocate are finding it harder to access the credit they need as banks continue to tighten their criteria for lending, especially for medium- and large-sized companies.
FinTech and the Presidential Election Will Try to Kill You, But Won’t Succeed Just Yet
Financial manufacturers including banks, factors and all manner of secured and unsecured lenders must prepare for accelerating uncertainty in 2016. Global economic turbulence, a rapidly shifting lending landscape full of FinTech start-ups, and the looming presidential election could stand in the way of more champagne and caviar. There are plenty of reasons to ignore Einstein’s famous adage now: prepare at once for war and peace.
There is also much good to toast come December 31. Lenders that kept their foot on the accelerator over the past five years are enjoying record originations and rising valuations. And the party is likely far from over.
Millions of small business owners remain left out in the cold by the same banks that keep their deposits. The survivors of the financial crisis need funds to grow in an improving economic climate, but they face a dilemma of how to fund this growth. A cottage industry offering daily payment loans is maturing inside the wide gap created when the market for bank credit lines and high limit credit cards disappeared. Continue reading →