Survey Shows Banks Increasing Small Business Lending Trends in 2018

Posted on | by Barbara Morrison

If you’re a small business owner in California looking to buy a commercial building, refinance one you currently own, or inject capital into your business, the lending market is on your side. The early numbers in 2018 are showing an increase nearly across the board in lending approval percentages. This is great news for small business owners.

According to biz2credit CEO Rohit Arora, “Despite some recent bumps, the economy has done well this past year, and new tax cuts have also added optimism to small business owners.” So how can you learn more about the small business lending trends in 2018 to determine just how and if they will affect your unique financial situation? TMC Financing has put together a quick and easy overview of small business lending trends in 2018, and how the Small Business Administration’s (SBA) 504 loan can be especially effective.  

What the Data Says About Small Business Lending Trends in 2018

In California specifically, banks and other lenders are optimistic about job growth. This has much to do with the 200,000 jobs added in California in the last four months of 2017, the largest job growth the state has seen in that timespan since 1990. “The mix of California job gains in last four months of 2017 has been especially good news for Southern California businesses, where logistics, tourism, and construction play an outsized role,” according to Stender Sweeney, executive vice president and division manager for Wells Fargo Middle Market Banking in the Greater Los Angeles market. If you are a Californian small business owner, in other words, your time has come.

This positive outlook on the economy spans the states, making for a solid national upward trend in loan approvals and business funding. Big banks are currently granting 25.3% of all small business applicants a new business loan, which is up more than a percent over last year. If you choose to work with a small bank you can currently expect a 49.1% approval rate, up slightly from last year as well.

Going with an alternative lender or an institutional lender (pension funds, insurance companies, or others) would give you approval ratings of 56.6% and 64.3% respectively. Credit Union loan application approvals did drop slightly, but only by one tenth of a percent putting them at 40.3%. Arora says, “With the economy showing good signs, the number of small business owners applying for loans has risen. They are showing confidence and are willing to take risks.”

Even with this data, SBA 504 loans are still the best option for small business owners looking for high approval percentages, low fixed rates, and no amortization.  

What Is the 504 Loan and How Can It Help?

The SBA 504 loan is administered by a Certified Development Company (CDC) such as TMC Financing, and loans are granted in conjunction with a conventional lender. This collaboration helps simplify the process and ups your chances of approval. Your conventional lender will supply 50% of the total loan, while the CDC facilitates the SBA loan for up to 40%, or $5 million at a fixed, below-market rate, currently 5.02%. This leaves only 10%-15% as a down payment for the borrower.

A 504 loan can be used to:

  • purchase land or buildings
  • construct, upgrade, or renovate buildings
  • purchase equipment with a service life of ten years or more
  • refinance conventional debt

If any of these could be helpful to your business and fit into your current business plan, then a 504 loan is a great option. With conventional lenders already approving more loans, and with the added benefits of the 504 loan, 2018 looks like the right time to start pursuing those financial dreams for your small business!

Reach Out to TMC Financing For More Information

You can find out more about it from one of TMC Financing’s 504 loan experts. TMC is an SBA Premier Certified Lender and a high-volume loan provider. With over 35 years of experience, TMC can help you find the financing that is best for you and guide you through the 504 loan process. Contact TMC Financing today.

 

Barbara Morrison
Barbara Morrison
Barbara Morrison, a local small business advocate and civic leader, founded her first company TMC Financing in 1981. TMC is a Certified Development Company that provides commercial real estate financing to small business owners via the SBA 504 Loan Program. TMC consistently ranks among the top certified development companies nationwide, and has funded projects worth more than $9 billion across California and Nevada. Nearly 5,000 small businesses have benefitted from this financing, resulting in the creation of an estimated 50,000 jobs. TMC is also the No.1 SBA 504 hotel lender in the United States. Barbara is also the founder of Working Solutions, a Bay Area microlender whose mission is to provide micro entrepreneurs, particularly low-income individuals, women and minorities, with the access to capital and resources they need to start a successful business.
Barbara Morrison
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