This is a guest post by Melissa of Resource Nation.
The current recession has hindered many people from receiving loans. According to a survey conducted by American Express, nearly one in five small businesses are unable to access the capital needed in order to effectively operate their business. Lacking funds, small business owners have tapped into their personal savings accounts and personal credit. Nearly 42% of small business owners rely on their credit cards for capital.
That said, there does seem to be hope for small business owners. One recent report states that the Small Business Administration’s chief loan program has secured double the amount of loans during a three-month span compared to last year alone. During the second fiscal quarter, SBA’s lending program backed 16,558 loans and lent out a whopping $3.7 billion. This total was twice the amount processed in last year’s quarter.
The 2009 Recovery Act has had an effect as well. It set aside $375 million funds to temporarily remove fees for SBA loans in order to increase a fraction of each loan. More than $24 billion in small business loans have already been processed through the Recovery Act. The SBA has also encountered a lack of funds on a total of three occasions. Because of this, President Obama has signed a legislation that encompasses an additional $40 million that carries the plan through April.
During his State of the Union address, President Obama expressed that the main objective for 2010 was to create more jobs for America. If small businesses have more money in their pockets, the government estimates that they will generate 65% new jobs for the U.S.
It’s no wonder that both lenders and borrowers favor the latest provisions.
Melissa is a writer based in San Diego, California. She writes extensively for an online resource that provides expert advice on purchasing and outsourcing decisions for small business owners and entrepreneurs such as debt management programs & debt consolidation at Resource Nation.