Banks Tighten Lending Criteria

A Business Loan Without a Bank?

It is a nervous time for banking. With words like “crisis” and “recession” looming, many banks are making it more difficult to borrow money. A recent Federal Reserve report1 showed that banks are setting more stringent regulations for borrowers.

Despite these new restrictions – there are ways to fund your small business. Read on!

One measure banks are adopting is requiring higher credit scores. Typically, a credit score of 700 or higher is considered “good” and is sufficient to secure a loan. However, the current uncertainty is prompting many banks to raise the threshold for both personal and business credit scores.

Additionally, many banks are requiring more collateral to secure funding. This may take the form of real estate, vehicles or business assets. Generally, the more valuable the collateral, the more favorable the terms of the loan.

Unfortunately, for many small business owners, these more stringent requirements will impact their ability to obtain a loan. While there are a number of ways to improve your credit score, they generally take a significant amount of time to have an effect. And although some banks will accept business assets as a form of collateral, it can be difficult to determine an exact value for them.

Thankfully, being turned down by a traditional bank doesn’t mean you can’t get a loan. Community Development Financial Institutions (CDFI’s) like Rising Tide offer hope for small business owners in this uncertain time.

We look at more than numbers.

Rising Tide, a subsidiary of Community Action Lehigh Valley, is a mission-driven nonprofit. Our goal is to help the local economy thrive by offering loan products to small businesses whose risk factors make it difficult to obtain traditional business funding.

Rising Tide believes that business success depends on much more than a credit score – which is why we consider many factors when deciding on a loan application. Our lenders work with entrepreneurs to fully understand the business plan and market conditions. Lending decisions also include a number of other factors such as personal experience and background, geographic location, and industry projections.

Rising Tide will even help you navigate the loan application process. Our business advisors are available to assist with financial planning, business plan development and more.

We can help.

While the uncertain economic outlook is affecting the ways banks are lending money, small business owners still have access to funding. CDFI’s like Rising Tide use factors in addition to credit score and collateral availability to make lending decisions.

If you are an entrepreneur looking to start your own business or you are looking to expand your small business, we can help. Contact Rising Tide to learn more about our loan products available for local small businesses and apply today.



1 Federal Reserve’s quarterly Senior Loan Officer Opinion Survey (SLOOS), May 8, 2023