Many banks have either steered away from small business lending or have severely tightened their credit standards. It’s no secret small business lending is very risky in normal times. Programs like REAP assist entrepreneurs in finding traditional and non-traditional sources of income.

How many times have you heard someone say this: “Access to capital is critical for small businesses.” Or it might have been, “The lack of access to capital is negatively affecting small business.” Possibly you heard something like this, “Economic recovery is dependent on providing access to capital to small businesses.”

I think you get the picture. Plain and simple, access to capital for startup and existing small businesses is a critical issue, hugely important to overall economic recovery and growth of the United States.

Why is access to capital so important? When you get down to the core of this question, the answer is really fairly simple. In much the same way a car needs fuel to run, small businesses need capital to operate. Capital allows small businesses to be able to expand and hire additional employees. Since small and micro-size businesses create the overwhelming majority of the jobs in the U.S., providing entrepreneurs with access to capital is an essential ingredient to a healthy and vibrant economy.

Why is access to small business capital tight right now? There isn’t a short answer to this question. It’s tied to the economic downturn over the past three years and the record number of bank failures in 2010. Due to this climate of uncertainty, many banks have either steered away from small business lending or have severely tightened their credit standards. It’s no secret small business lending is very risky in normal times. Complications due to current economic conditions and other issues make this much more difficult for everyone involved.

Where can small businesses go to obtain capital? Programs like the Rural Enterprise Assistance Project (REAP) can help. REAP provides opportunities for access to small business capital in both good and poor economic times. Our staff is also knowledgeable about a range of lending sources – both traditional and non-traditional. Often it takes more than one lending source to make a deal happen, and programs like REAP can make the difference by serving as the “loan packager”. REAP has loaned in record num¬bers over the past three years and has kept “access to capital” a reality in places where it wouldn’t have been available otherwise.

The Center for Rural Affairs’ Rural Enterprise Assistance Project (REAP) is a full-service microenterprise development program and operates on a statewide rural basis in Nebraska. You can find out more about REAP services by contacting Jeff Reynolds, REAP Program Director, at 402.656.3091 or jeffr@cfra.org.