That's not to say smaller banks haven't been affected by the broader economic climate. "Regulators are cracking down, and credit scores have gone down across the board," Merski notes. The slumping real estate market has also affected small-business owners, who often use their homes or workplaces as collateral. "With real estate down by roughly a third, those borrowers have less to offer as collateral," he says. Lending criteria have gotten stricter, and entrepreneurs may find themselves jumping through more hurdles to get approved. Now more than ever, it's crucial to show your ability to grow sales and pay back the loan. Lending to small businesses remains a risky proposition, and lenders -- no matter what their size -- need to be wowed before they'll say "yes." And that's not a bad thing. When times were flush and loans were handed out with little more than a signature, bad debt ended up crushing us all. Higher lending standards result in better loans and stronger businesses. If you have a compelling vision, you can still get funding, as long as you're prepared for a hard sell.