Small business lending improving, but not fully recovered
The lending environment for small business in Yavapai County is improving but still has a way to go to reach pre-recession levels. Many small businesses in Yavapai County continue to suffer the lingering effects of the recession resulting in diminished sales due to lower consumer spending. Since a large percentage of small business and entrepreneurs finance their operations with personal assets, the lower sales have, in many instances, resulted in lower credit scores. Falling property values, throughout the County, have diminished the equity available small business draw upon for expansion and acquisition. As the economy and business continues to improve, this is leading to a more favorable lending environment.
In cases in which commercial banks are still reluctant to make a loan to the small business, the U.S. Small Business Administration (SBA) offers programs to reduce the risk to the lender of the business defaulting on the loan. These programs include:
Micro-loan programs that provide small short-term loans to small business concerns and certain types of not-for-profit businesses. The SBA makes funds available to specially designated intermediary lenders, typically nonprofit community-based organizations. These intermediaries make loans to eligible borrowers up to $50,000.
SBA 7(a) loan programs include funding for the purchase of equipment, short or long-term working capital, funding for businesses that exports to foreign countries, businesses that operate in rural areas, and for other purposes.
SBA 504 loan programs provides approved small businesses with long-term, fixed-rate financing used to acquire fixed assets such as an owner-occupied building. 504 loans are made available through Certified Development Companies (CDCs), typically partnering with a local bank.
Kurt Haskell is the director of the Yavapai College Small Business Development Center that provides counseling and educational services at four locations across the county for all business start-up, retention, and expansion needs.