Small business financing is a great thing, but many people don’t recognize the side effects that result from the financing. In fact, lenders who choose to take a chance on small business owners help to create a number of side effects that benefit the entire community on multiple levels. Have you ever wondered what it means to help a small business get started or to expand? Consider these benefits and how they relate to you and your neighbors.
Creating More Jobs
Whether the focus is on an entrepreneur who is launching a new business venture or a small business owner who wants to expand an existing operation, lenders willing to extend financing set the stage for more jobs. Each new job created provides the opportunity for one more household in the community to have the funds needed to afford basics like food, clothing, and shelter. Overall, this means people don’t have to turn to neighboring communities to find work and they can still enjoy a reasonable standard of living.
Creating More Customers Too
Assuming that job provides some amount of additional income, that means more funds for the new employee to spend on eating at local restaurants and purchasing goods and services from other businesses. Thanks to the financing and the expansion of that one small business, other companies in the community have more customers to purchase the goods and services that they have to offer.
What started out as an owner of a local limo service purchasing a few more automobiles to keep up with the demand led to hiring more drivers. Those drivers now have stable employment close to home and are more likely to buy their groceries, their clothing and other basics within the community. That in turn means other businesses may need to hire more servers, wait staff, and stockers. Each of those in turn use their paychecks to buy more locally. Some of them may even decide to hire a limo service for some special occasion.
The Tax Money Stays in the Community
What happens to the amount of local taxes when more people have to work and shop outside the community? Naturally, not as much tax revenue is generated. That translates into less funding for the community infrastructure, including schools, maintaining roadways, and supporting local services like a fire department.
Financing small business enterprises indirectly means more people spend their money in the local community rather than spending it near the jobs they have to find in a neighboring community. It also means some forms of tax revenue will increase and remain closer to home. Ultimately, everyone benefits from that additional revenue.
Small Business Owners Tend to Get Involved
While many of the side effects of providing financing to small businesses are financial, others have to do with enhancing the sense of community. Have you ever noticed how often it’s the small business owner who sponsors a local sports team for young people? Who tends to be more active in a local chamber of commerce? When there’s the need to organize a drive for a non-profit, it’s often the small business owner who is among the first to offer supplies free of charge.
The bottom line is that more small businesses in the area increases the odds of greater community involvement. Unlike a CEO of a major corporation who lives thousands of miles away from the community, that local business professional has friends and other loved ones there. Of course it makes sense that the business owner would do whatever was in his or her capacity to make the community stronger.
More Goods and Services Closer to Home
Anyone who ever lived in a community with few small businesses knows that it’s often necessary to drive to the next largest town or city in order to buy certain goods or services. That means spending time on the road that could be put to better use. When there are more locally owned businesses in town that offer whatever you need, it’s a matter of making a quick five-minute drive, getting what you need, and then going home. Along with the convenience factor, you also have more free time.
A Generally More Stable Local Economy
Keeping more tax revenue and more money in the local community is also part of why financing to small businesses is so important. As many communities found during the last recession, stable local business operations are able to withstand reversals in the economy for a longer period of time. Instead of being left with an unsure future when the plant employing a thousand people suddenly shuts down, local businesses can often make minor adjustments and hang on until the economy improves.
Affordable financing can do great things for a small business. It also creates a ripple effect that benefits the entire community. If you are thinking of starting a small business or expanding the operation you already own, consider your financing partner carefully. The right one will help you strengthen your company as well as the impact it has on everyone else in town.