According to the results of the NSBA’s 2008 Small & Mid-Sized Business Survey, the number of small businesses using bank loans for financing has reached a record low point. The NSBA’s Survey data shows that in 2008 only 28% of the polled small business owners used a bank loan to answer working capital needs, down from a high of 45%, set back in 1993.
What does this mean?
Based on this number, it is easy to infer that getting money for a small business is increasingly challenging for many business owners. Or, at the very least, it suggests that traditional lending channels are not answering all the needs of today’s small business owner.
In either case, it means if you are a small business owner seeking capital, you will most likely need to look beyond the traditional methods of business financing. Knowing more about all of your options will help you to move forward when (or if) the battle to secure a traditional method of financing is threatening to slow your momentum.
Why is it changing?
Modern businesses are unique, and their needs diverse. The old school, “one-size-fits-all” approach to handling business costs is not always going to work anymore. Bank loans can be restrictive and many businesses will simply not be able to qualify.
New business models require a fresh approach to some common situations. This, in turn, is encouraging more business owners to look beyond the banks to discover better ways to handle working capital needs.
What should a business owner do?
The best plan is to be prepared. This means, if the stats are saying that bank loans are becoming harder to arrange, the smart business owner is going to know what other capital options might be applicable.
A Merchant Cash Advance is one answer that many owners find to be flexible and appropriate to many situations. Knowing when and how to use this funding is one way to create a distinct business advantage. When a bank loan is not the best option on the table, perhaps a Merchant Cash Advance offers a smart way to handle your business’ immediate working capital needs.
What do you think? Have you personally found it difficult to get a bank loan for your small business?
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