It is pretty clear that nobody has been able to stay immune to the
downturn of the economy over the last 18-24 months. Businesses large and small across all verticals have really
been forced to find ways to tighten spending just to stay alive and I am pretty sure the wound will continue to
bleed before it completely heals.
Unfortunately the finance industry has really felt the majority of
the blow leaving behind a massive trickledown effect hurting a variety of businesses in many different
Small business loans have seen a very large impact from 2008 to
2009 for most large banks and lending institutions. It is pretty obvious why this has happened but the million
dollar question on many people's minds today is, when is it going to end? Small businesses are the foundation to
the U.S economy and make up over 70% of the workforce. They are the little engine that keeps things moving. Why
would we want to stop lending to them? For an individual attempting to get financing to purchase an online business
in today's marketplace they really have their work cut out for them. Banks don't want to lend out any amount of
money right now to purchase any intangible assets.
It is tough enough already to purchase a brick & mortar
business with concrete tangible assets never mind something that is considered invisible in some people's eyes.
Currently one bank has been able to stay on top and continue to either loan or manage a healthy portfolio of small
business loans, Wells Fargo. They have actually been able to increase their lending by 4% from 2008. Where does
some of the problem stem from? Old fashion thinking and underwriting is one problem area. Many small business loan
underwriters don't acknowledge the fact that there is a vastly huge online business market which many people are
trying to tap into even more than ever before. Maybe part of it is because underwriters don't know how to put a
value on a website.
If a website generates 1 million visitors a month but can't cover
their hosting fees are they worth giving a loan to? Ask the owners of Twitter this question. Their expenditure
compared to their revenues would most likely make an SBA loan underwriter throw up in their chair but the reality
is that Twitter is one of the most valuable websites on this planet and they still do not generate anywhere near
enough revenue to warrant a loan from a small business underwriter. If these banks found a way to put an actual
value on a website I think we would see the lending institutions really open up their lending habits with a very
open mind. I mean look at where "tangible assets" got them up to this point? Mostly just a lot of empty homes and
boarded up businesses across all fifty states.