Small Businesses Expecting Growth, but Face Challenges Accessing Working Capital

August 22, 2016         By: Mike Dautner

Small businesses are considerably positive in their expectations for the next 12 twelve months, with 64 percent anticipating major growth, according to the Small Business Health Index for CAN Capital, the market share leader in alternative small business finance.

Growth usually prompts a measure of funding to finance expansion and new projects, but 42 percent of small business owners say it’s quite or extremely challenging to gain access to working capital.

The majority of small businesses are in need of smaller amounts of capital, which the usual loan process typically doesn’t allow for.

In fact, 66 percent of small business owners are looking for amounts of $50,000 or under when seeking funding, with the most common reasons being to purchase equipment and/or inventory or to expand operations.

“It’s encouraging to see small business owners feeling so good about their prospects for growth,” said Daniel DeMeo, Chief Executive Officer, CAN Capital. “To ensure they are able to achieve their goals, it’s important that they have fast, efficient access to working capital to fuel their expansion.”

87 percent of small business owners have never tried obtaining working capital from an online finance provider, highlighting the need for educating small businesses on alternative sources of funding.

“It’s clear that small business owners don’t always know how to find the kinds of loans they need,” said DeMeo. “For those in need of larger loans, there are an array of options, including traditional bank loans. But when small business owners come to us for access to working capital, the average loan amount is about $50,000. Many banks and other financial institutions find it inefficient to loan in these smaller amounts, leaving a huge gap in the market for small businesses. Alternative finance companies are able to fill that gap, and do so with real-time approvals and fast funding, so business owners can get back to running their businesses instead of searching for capital.”