Future and current small-business owners: good news. The Small Business Administration just rolled out the LINC (Leveraging Information and Networks to access Capital) program, which was developed expressly to make getting small business loans online easier and faster.
If you're new to the world of small business loans, you may wonder why this is such big news. In short, small-business owners have long had a difficult time securing loans from banks because lenders view them as a gamble. Sure, they may have good credit scores, great entrepreneurial ideas, and a sound financial plan, but small businesses don't have the track record big corporations have. To lenders, that means it's risky to finance them and the profit margins are too thin to make the deal worth their time. The SBA estimates…
- 80 percent of small business loan applications are rejected.
- Most small-business owners can't even get an appointment with a loan officer in the first place.
It may seem like the lenders' loss – after all, small businesses have created over 65 percent of all American jobs since 1995 and employ over 50 percent of the entire nation's population, according to Business Insider. Talk about a missed opportunity! But without a little financial boost – whether it's with term loans, invoice financing, real estate loans, or lines of credit – small businesses may not be able to get off ground in the first place.
How LINC Is Changing Small Business Borrowing
According to research by the SBA [PDF], small businesses borrow for four distinct reasons:
- Starting a business.
- Purchasing inventory.
- Growing the business.
- Strengthening the firm.
LINC simplifies the lending process so that more entrepreneurs can get the financial backing they need to help their ideas take shape. Think of LINC as an online matchmaker: it connects prospective lenders and borrowers. Here's how it works:
- Potential borrowers simply complete a 20-question online form.
- The application is sent to participating SBA lenders.
- If a lender likes what it reads, it's a "match."
A match doesn't guarantee a loan, but it is a form of pre-screening. That means the small-business owner has a foot in the door, which can put them on the fast track to borrowing.
What happens if you don't get a hit? You'll be put in touch with a SBA adviser to help you with your loan application.
When you do get a hit? Your lender should be in touch with you in 48 hours and help you through the rest of the process.
For more information about small business lending, be sure to check out "How an SBA Small-Business Loan Can Help Your Business Grow" and "Small Business Bills to Follow."