Well, it looks like our economy is finally turning the corner and the small businesses are starting to show a profit, much like the corporations have been for the last 18 months. Indeed, there are a lot of retained earnings at the corporate level, and the banks are on solider footing and willing to make more small business loans now.
We are also entering an election year, and typically that is good news for the US economy. In my retirement I do a little bit of business consulting, and the other day I was assisting a small business person prepare a business plan, put together some proformas, and the other required documents to secure a business loan. She had decided not to go with a SBA or Small Business Administration loan because of all the stipulations and requirements, which did not make sense for her financial wherewithal, and abundance of personal assets.
Neverheless we got to talking about what she was planning on doing with the money and it turns out she was going to expand her business so she could make more money. In doing so she will be hiring more individuals, and right away she will be hiring three new salespeople and two for marketing. That's five additional jobs that she will be creating. She will use some of the loan money for cash flow as the salespeople and marketing department sign up new corporate accounts.
Indeed, sometimes this shows how commercial loans for small business adds to job creation in this country. The corporations are very good at collecting money for their goods and services, and they are extremely good at lobbying protectionistic rules and regulations from government to stifle their competition or put up barriers to entry. But for a small business person who is in the trap of a poor business cycle or the uncertainty of future regulations it causes entrepreneurs to forgo the risks associated with business expansion, or taking out more credit in their personal name or in the name of their business.
Prior to now, there was not a whole lot of lending going on in her industry or sector, and although there was some, it has not been until now that she felt confident enough to go out and risk capital or borrow more money. Now she does feel confident, and she is moving this ball forward and down the field. Indeed I hope this will help others see how important commercial loans are for small business and job creation. Please consider all this and think on it.