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Lending

Brother Can You Spare Loan

As banks continue to tighten lending, many small businesses are turning to microlenders, which grant loans averaging about $10,000. According to The Washington Post, small businesses also are increasingly looking to Internet-based peer-to-peer lenders to meet their capital requirements.

Starting a business right now is difficult, but not impossible. Financing is one of the major roadblocks which is forcing many new entrepreneurs to bootstrap or use plastic. Once the banks are allowed to start lending, new business activity should begin to grow.

Interest Free? No Thanks

President Barack Obama's proposal to increase small-business lending is "an interesting idea" but does not take into account signs that small businesses do not want to increase their debt, Catherine Rampell writes. "Just increasing the supply of credit available to businesses won't be enough to jump start lending. Businesses have to want that credit, too," Rampell writes.

Having recently completed a series of focus groups with small business owners, I can attest that this is very true. Most businesses are looking for payback in 18 months or less and do not want any long term debt obligations regardless of the attractiveness of the offer.