Today’s post started with a question I asked of our CEO, James Broom. The question was how he would describe the current lending landscape for small business? Being a business owner himself, Jim has a unique and inside view on the capital markets and how they are affecting the country’s small and medium size business.
This is the most difficult time in many decades to access capital and financing. Difficult may be too soft a term to describe the current situation – the financial structure that capital flows through has been permanently altered.
The Reservoir Went Dry
Think of a reservoir that has always supplied water to a particular area. Then one day an earthquake cracks the earth’s crust just below the surface and just like that the whole thing dries up. What would happen?
The people “in charge” act quickly and find a new saltwater source nearby. Finding this water is great, however, it has to be processed differently than the prior water supply. The saltwater source needs to flow through new channels while sections of the prior grid are eliminated. The banking system is broken but we’ve figured out the new distribution system to both access and deploy capital to the small business community.
Thankfully, American ingenuity and the entrepreneurial spirit have spurred new products and forms of capital that are making their way into the market. What today’s business owner needs to do is figure out is where to look for it and how he/she needs to position him/herself to access it.
The Money Is Out There
While capital costs are higher and there is not as much as before, there is money out there. There are trillions of dollars on the sidelines waiting to be deployed. People need to be more careful when they go looking for financing and be smart in how they use it. Also, if a business hasn’t applied for a loan or working capital* in the last 18 months, they need to have different expectations.
One of our goals at Direct Capital is to be your financial advocate. Let us know how we can help. If you have questions about how to access capital or position yourself to get this capital for your business, feel free to contact our Finance Managers for some guidance or ask your question in the comment section below.
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*Working capital not available in the following states: AK, DE, ND, VT