New Commerce Secretary Not Likely To Support Small Business Financing

If the Obama administration was looking for a friend to small business, they won’t find one in New Hampshire Senator Judd Gregg. Gregg has consistently voted with Big Business and doesn’t believe that government has a role in helping small businesses. This puts into question the Obama administration’s apparent policy support for small business financing in the stimulus package now being considered in the Senate.

On the surface, the bill appears to provide for some small business financing, however analysts are disappointed with the package’s overall approach to supporting small businesses. Less than one billion dollars is devoted to the Small Business Administration for increased ending, along with changes that permit the SBA to buy up guaranteed loans in the secondary lending market.

While many analysts agree that the stalled secondary loan market is responsible for the sharp decline in small business lending, and they agree that direct lending is a good approach to increase the availability of cash for small business owners, the overall role that small business plays in the stimulus plan is small. Given that about 70% of new jobs created in the US come from small business, some analysts and observers feel that too much assistance is being offered to big business and to financiers, when the real economic power is concentrated in the heavily fragmented small business sector.

There’s no doubt about it, however. Small businesses are suffering from a lack of access to capital. Banks have funds to lend and loan guarantees by the federal government, but they’re unwilling to lend because they cannot tolerate even the small risk that a Small Business Administration loan currently poses. Small business owners are caught in the middle.

For some, a solution may come in the form of a merchant cash advance. Merchant cash advances aren’t bank loans that are repaid over long periods of time. Instead, a merchant cash advance is an advance on a business’ future credit card sales. As the credit card transactions come in, the cash advance is repaid, along with a small percentage. Merchants whose businesses are registered in the US, accept Visa and MasterCard and take in more than $2,500 in monthly credit card receipts are eligible to apply. No collateral is required and even merchants whose credit is not good are able to take advantage of a merchant cash advance.

Don’t wait until your back is against the wall. If you need cash to make your business run, contact Rapid Capital Funding today.

Photo Credit: Gaetan Lee

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