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More Small Business Owners Plan to Seek Bank Loans

July 10th, 2012 ::

By Karen Axelton

Where are small business owners turning for financing these days? If you think entrepreneurs have given up on obtaining bank loans, think again. More than two-thirds (68 percent) of entrepreneurs seeking capital for their businesses in the next six months say they will pursue bank loans, according to a survey from Pepperdine University’s Graziadio School of Business and Management, conducted in partnership with Dun & Bradstreet Credibility Corp.

The next most popular source of financing was a business credit card, cited by 40 percent; followed by credit unions or Community Development Financial Institutions Funds (CDFIs), cited by 36 percent.

The First Quarter 2012 Private Capital Access Index study found that business owners with revenue of over $5 million were more optimistic about successfully raising financing from banks than were smaller businesses. Ranked on a scale from 0-4, larger businesses’ confidence in their ability to get a bank loan averaged 2.3, while businesses with sales under $5 million ranked their confidence level at 1.4.

The numbers show significantly higher interest in bank loans compared to the prior survey findings released in December 2011. At that time, just 37 percent of respondents had actually tried to get bank loans in the past 12 months. In contrast, nearly half of respondents (49 percent) had used credit cards. Of course, it remains to be seen if the 67 percent of entrepreneurs planning to apply for bank loans actually follow through. However, the growth in intention alone is a positive indicator.

“As business owners secure more traditional sources of financing and rely less on their own personal resources,“ said Dr. John Paglia, director of the Pepperdine Private Capital Markets Project and associate professor of finance at Pepperdine University’s Graziadio School of Business and Management, “they will have more discretionary money to spend thereby stimulating our economy.”

Image by Flickr user Philip Taylor PT (Creative Commons)

The views expressed here are the author's alone and not those of Network Solutions or its partners.

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Posted in Capital Access, Small Business, small business | 3 Comments »

  • http://www.businessmoneytoday.com/ Phanio

    The thing is, will the banks provide the needed financing? And, if not, where will they (the 68%) turn to next? I think you stat of 68% is a bit off. Why? Because most small business owners think that bank loans are their only option – and they are so wrong. Many other options and many of these other options are better options.

  • http://www.bizplancompany.com/ BizPlanCompany

    Bank lending is still viable if the guarantors are very solid. If collateral is lacking, we suggest seeking out those lending institutions that are active with utilizing SBA guarantees.
    P2P lenders still remain viable for smaller loans and we have had several clients successfully fund businesses via this route.
    Equity can be tough but we have had some clients secure equity funding from the crowd funding platforms.
    It is a difficult environment out there and first impressions are important, make sure you put together a solid and professional funding proposal and business plan before hand.
    Best of luck to everyone.

  • http://www.balboacapital.com/ Equipment Leasing

    For whatever reasons, not all businesses may qualify for bank loans. There are always alternatives, which don’t have the same requirements as banks. Balboa Capital is a leader in the equipment financing industry and we work with small and medium sized businesses throughout the whole United States. Each business we work with is provided a customized lease, depending on their situation and financing needs. We have a successful track record and have been around for over 20 years. Hopefully the economy will pick up soon enough, but until then the situation is tough for many people. A positive mindset also has a lot to do with business success, and that is an idea that Balboa Capital has always maintained.