New York (PRESS RELEASE – May 27, 2011) – Many small and mid-sized businesses (SMBs) still look to their banks first for working capital, according to Capital Access Network’s (CAN) Spring 2011 edition of the Small Business Barometer. However, only 34 percent have actually obtained a collateral based-bank loan. More than one out of ten SMBs seek out more innovative options than bank loans, including Merchant Cash Advances, non-traditional loan providers, peer to peer lending and factors.
The major criteria banks use to make finance decisions – owner’s personal credit score, personal and business collateral and liquidity – have suffered with the economic downturn, limiting SMB access to capital. Alternatives are available, but at least half of respondents were not aware of one possibility – selling future card sales at a discount in return for access to money today through a product called a Merchant Cash Advance (MCA). Additionally, 68 percent were not aware that they could access finance products that offer payment and remittance flexibility in the form of smaller “daily” payments that help the business’ cash flow by avoiding lump sum monthly payments. 42 percent of those surveyed said that a daily remittance feature would be appealing.
“Small businesses must be vigilant in exploring alternative finance options. While traditional bank loans may be preferred, they may not be the most available or best option for Main Street businesses,” says Glenn Goldman, CEO of CAN. “New products and features are making their way into the marketplace and are often a better fit and easier to access. Time is precious. These options can deliver capital faster, avoiding the delay involved when dealing with banks that decline many more requests than they approve.”
The National Small Business Association reported in July 2010 that a record 41 percent of small business owners say they can’t get adequate financing from traditional banks, up from 22 percent two years ago. “The past few years my confidence in banks has lessened and I’ve started looking for capital elsewhere. Companies and financial institutions that are innovative enough to provide alternatives are the way of the future,” states Jason Roberts, Subway franchisee and customer of AdvanceMe Inc., a Merchant Cash Advance provider.