Good news continues for small businesses

Small Business Lending

At the end of last month, we wrote about how regulatory changes for the Small Business Administration has led to additional funding for business loans. The agency has announced that it may be waiving a fee for banks guaranteeing loans for small businesses, which would likely help those with smaller budgets compete with applicants interested in loans that may appear more profitable for the bank.

Now, more good news has arrived for small businesses looking for financing. A survey by the FICO’s Professional Risk Managers’ International Association found that 70 percent of risk managers at U.S. banks expect that demand for loans from small businesses will rise in the next six months, and over half said that more credit will be given to these businesses. Additionally, more than half of respondents said the increase in demand will be me and more than three-quarters believe that the delinquency rate will either stay the same or decrease.

In all, those institutions that are controlling the money that may be given to small businesses are relatively positive–something that couldn’t be said for the past few years.

“In the past, the banking professionals we survey haven’t been as optimistic about credit for small businesses as they have been for other types of lending,” Andrew Jennings, FICO’s chief analytics officer, said in a press release. “The upbeat sentiment makes me think it’s possible that we’ll see small businesses picking up the pace of investing and hiring in the months ahead.”

For financial institutions that will be lending to these small businesses, credit management risk tools can help both extend credit while keeping delinquency rates down. As more small businesses apply for loans, having the necessary risk tools can help banks keep up with lending while bringing down defaulted loans.

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