Manage Small Business Loans During a Recession

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Manage Small Business Loans During a Recession
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What is a recession and what causes it?
Youll often hear that a recession is nothing
more than a decrease in GDP (Gross Domestic
Product) for two or more successive quarters. By
this definition, the U.S. is already in a
depression. However, many economists are quick to
point out that in economics, definitions are
rarely that simple, and the fact that we are
coming out of more than two years of pandemic
disruption should give us pause before declaring
an economic recession.
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• The U.S. has seen 33 recessions over the past 165
  years. Officially, when the country is in a
  recession, the National Bureau of Economic
  Research (NBER) will make a formal declaration.
  The organization tracks business cycles and looks
  for certain indicators, including
• A slowdown in consumer spending
• A decline in the Gross Domestic Product (GDP) for
  two or more quarters
• Rise in unemployment
• Stagnant retail sales and industrial production
• Incomes failing to rise with inflation

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What causes a recession?
There are a few factors that can precipitate a
recession. The first is a shock to the economy
that has widespread implications. The after
effects of Covid has contributed a lot to our
current economic state. Many businesses shuttered
their doors at the beginning of the pandemic.
Many people became sick, while others worked from
home. There was less money going into the economy
as retail came to a screeching halt. These
events also led to another factor that can lead
to a recession. Consumers began to lose
confidence in the economic state of the country.
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On the flip side, there were some points during
the last two years when people were overspending
and it led to a shortage of goods, which also
leads to higher prices or inflation. This led to
the Federal Reserve raising interest rates to try
and slow demand and spending so that the economy
can balance out. By raising rates and making it
more expensive to buy things on credit, the Feds
are betting that inflation will fall, prices will
in turn go lower, and the economy will correct
itself. In the meantime though, the country
might have to deal with a recession. The bottom
line is that sometimes things get worse before
they get better. But eventually, they get better.
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How does a business manage debt in a recession?
During a recession, and even before one is
formally declared, its more vital than ever to
be proactive in managing your business debt. Your
entire business reputation and credit are at
stake. How you handle your debt obligations will
affect your ability to grow your business and
access financing when you need it. During a
recession, lenders become more reluctant to loan
money, particularly to someone whose credit
profile isnt all it could be.
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In truth, traditional lenders, such as banks,
credit unions, and the Small Business (SBA)
Administration, always have rigid underwriting
standards that are hard to meet. It can be
challenging to get approval for SBA loans or
borrow from a bank during the best of times. But
they tighten their lending criteria even more so
during a recession, so its vital to protect your
credit record, especially if its taken you years
to build. Newer entrepreneurs should focus on
building their credit profile so that when they
need funding, its easier for them to
qualify. Thankfully, there are alternative
lenders like Biz2Credit who specialize in easier,
faster funding when financing with a traditional
lender is not likely to happen.
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Why Choose Biz2Credit?

• Trusted partner for franchise funding
• Biz2Credit was founded in 2007 and has provided
  more than 10 billion in loans.
• Dedicated support team
• Tailored financing solutions

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Thank You