Photo by zizzybaloobah

With the words “double dip recession” on everyone’s lips, it’s no wonder that lenders are becoming even more parsimonious with small business loans. Small business loan approval rates by large, national banks fell from 9.4% in May to 8.9% in June, and industry analysts predict that lending will only tighten.

Though large banks shy away from small business loans, credit unions are still a (somewhat) reliable source of funding. Where a large bank approves less than one loan in ten, a small institution approves more than four in ten.

If, like the majority of small businesses, yours is denied a small business loan, you can consider using a credit card to provide working capital. According to the Federal Reserve, more than 80% of businesses do so. Here, too, credit unions can step in. They’re not-for-profit, and federally chartered ones cannot charge more than 18% interest. Not all credit unions offer small business credit cards, but those that do tend to offer lower interest rates.

While credit unions are a good source of low interest loans and credit cards, for the most part, they lack the resources to offer the same generous rewards programs as major banks. On the other hand, they are generally more forgiving of carrying a balance or being late on your payments.

Anisha Sekar is a staff writer at NerdWallet, a credit card website dedicated to bringing you the best small business credit cards.

Photo by zizzybaloobah.

Originally posted by Guest Poster on August 13, 2011 in Guest Posts.

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