After years of running her business out of her home, Melodie Courtney opened a center this past spring for her company A+ Home Tutoring.
Over the summer, she took out a $5,000 loan to help her get through the slow season.
Business picked up when the school year began, but in anticipation of another lag, she again applied for a loan of similar value last month. This time she was denied.
"They are not as quick to give out loans as they were before," she said.
A harsh reality many small business owners face as credit markets remain tight.
But Catalina Castano with the New York State Small Business Development Center says entrepreneurs are not totally out of luck.
As the credit market remains tight, taking loans from micro-lenders, small and medium banks might be a more viable option for small business owners. Shazia Khan has more.
"They will have to work a little harder to get that loan, but there are some options out there so they can get credit," explained Castano.
Castano say business owners should not look to big banks. Instead, they should turn to micro lenders and small to mid-size banks.
"Small and local banks haven't been as affected as the big banks by the economic crisis," she said. "Basically what they do is they have a different system for credit underwriting. They might take higher risk. The client will have to pay for that because there might be a higher interest rate, but there is still money available for them."
But before business owners even approach a lender, Castano says it's critical for them to prepare a new business plan.
In the past, applying for a loan was often a simple and straightforward process for most existing businesses. Today it's a different story.
"They would have to prove to the lender that they know what they are going to do with the money and that money is going to have a positive impact in their cash flow and their sales," explained Castano.
Castano says it's also critical for businesses to show potential lenders not only how they're preparing for the expected, but also how they'll manage the unexpected.
"Lenders definitely want to make sure that business owners have planned ahead," she said. "In this time of so much uncertainty, they definitely want to make sure they're going to have their money back."
As for Courtney, she's now relying on credit cards to help keep her business running, but says she will continue to explore other options.
To find out how you can work with a consultant with the New York State Small Business Development Center, go to www.nyssbdc.org