While almost all small businesses require financing at some point, few are using the resources available to them.
This surprising insight comes from a new survey conducted by Fundera, a small business lending marketplace. The report found 80 percent of small business owners have never set foot in their Small Business Administration (SBA) branch, an agency that specifically caters to their needs.
Business Owners Not Paying Attention to the Financial Health of Their Business
Surprisingly, the report found while many small business owners check their personal credit, they seldom review their business credit score.
In specific numbers, 58 percent of respondents said they don’t check their business credit score at all.
What’s more, 34 percent of small business owners said they were “not at all interested” in seeing a free business credit score for their business.
Businesses Borrowing Funds to Grow
That being said, it’s a positive sign that most businesses are seeking loans to grow.
The report found 49 percent of small business owners are seeking working capital. Forty percent said they needed funds to purchase equipment, while 37 percent cited expansion as their primary reason to borrow.
Evidently, small business owners are taking a rather proactive approach when they are applying for funds.
How Owners Are Getting Money to Grow a Small Business
To meet their financial requirements, most small businesses (66 percent) said they opt for the big banks.
A large number of businesses also approach their friends and family to secure funds. According to the report among those who take the traditional route, 66 percent borrow from family. Thirty-six percent said they borrow from friends.
Only 11 percent of surveyed business owners applied for a loan with an online lender.
About the Survey
Fundera and Qualtrics conducted a random survey of 409 small business owners and senior leadership at small businesses to produce this data.
SBA Photo via Shutterstock