Did anyone see the article on CNBC.com called: Small Businesses, Big Banks: Good Fit?

The article basically talked about how small business owners are still facing strict lending restrictions from larger banks like Bank of America, so they’re turning to smaller banks for their small business lending needs. Specifically, the article talked about a couple of small business owners that experienced a season of poor sales (as a result of weather), and how their banking partners terminated their loans as a result. This type of situation happens often enough, and small, local banks have been sweeping into to save the day–in some cases.

Overall, all banks want assurance that borrowers have the means to repay their loans, as well as a secondary source of repayment, such as collateral.If a small business owner can’t show a profitable operating history and/or strong financials, he/she will find it extremely difficult to be approved for a traditional line of credit with any bank.

One alternative financing option that was not discussed in the article, but that would be extremely beneficial for these small business owners is for them to use is accounts receivable factoring. Instead of basing advances on the company’s past performance, a factoring firm is more concerned with the future–As in the company’s accounts receivables. Moreover, because factoring is not a loan, the balance sheet stays clean, and the credit line grows as the company grows.

Click here for more information on the differences between a bank loan and factoring.