One of the biggest obstacles to growth for small businesses is access to capital. But with so many options, more than two thirds or 39 percent of small businesses have never heard of alternative financing. This is according to the November 2017 Reliant Funding Small Business Report and infographic.
November 2017 Reliant Funding Small Business Report
With small business loan application rejection rate estimates of 80 percent, finding an alternative source is extremely important for many business owners. The report from Reliant Funding reveals how small business owners will fund their organization in the coming months as they look for new opportunities. In addition to access to capital, the report also highlights how small businesses manage their debt, business backup plans they might have and how they feel about alternative finance providers. The Reliant Team responsible for the report said on its site, “It’s part of the ongoing process to understand the issues small business owners face.”
Reliant Funding surveyed small business owners in the retail, construction and professional services industry. More than half of the small business owners were female and 44 percent of them made less than $250,000.
What Is Alternative Financing And Why Do Small Businesses Need It?
Small businesses are searching for alternative financing because traditional lenders, such as banks, no longer give out loans to the extent they used to in the past. This has driven businesses to look for alternative financing to fund their growth.
Some of the alternative sources for business loans include peer to peer financing, account receivable loans, credit cards, hard money loans, merchant cash advances, purchase order financing, and others.
Key Stats from the Report
One of the reasons small businesses are looking for loans is because they are optimistic about the future. In fact, 50 percent of small business owners responding to the survey described themselves as optimistic, while 43 percent stated they were satisfied. Only seven percent said they were discouraged.
When it comes to alternative forms of financing, 49 percent said they were familiar with it, adding however, they have never used it before. Only 1 percent said they were familiar with and also used alternative financing services.
As to the reason why they chose these alternative financial services over traditional lenders, five percent said it was to get cash right away, seven percent said it was due to a bad credit history and another seven percent weren’t happy with the application process at their bank or credit union.
Buyer Beware
If you are a small business owner looking for an alternative source of financing, make sure the company you are dealing with is reputable. Research the company thoroughly by asking for references and checking with regulatory agencies. And before you sign on the dotted line read all the fine print.
You can look at the rest of the data on the infographic below.
Images: Reliant Funding
Allison Kelly
How many businesses were included in this survey? Where were they pulled from? What is the geographic coverage?
Aira Bongco
Funding is good as long as you can guarantee that money will grow in the next 6 months. Else, it will just be an expense.
Of those 39% I wonder how many would think of loan sharks or similarly unreputable sources as “alternative” financing.