Equipment purchases came in second place, cited by 29.4% of respondents, while marketing and advertising accounted for 28.6% of the loan usage. Respondents had the option to select up to three choices.Īccording to the survey, a significant proportion of business owners used the funds for business expansion, with 42.4% selecting this option as one of their top three choices. Reasons To Apply for a Business LoanĪ Forbes Advisor survey sought to identify how business owners used funds from their latest business loans. So, despite challenges, businesses are finding ways to navigate financing and manage their debt effectively. The good news is that outstanding debt to small businesses has decreased from 80% in 2020 to 74% in 2021, with most firms having $100,000 or less in debt. Overall, the percentage of applicants receiving all the funding they applied for has decreased. Only 31% received all the funds they sought in 2021, compared to 51% in 2019. While traditional financing has become a less popular choice among businesses seeking funds, the process has also become more challenging. However, it indicates that small businesses are picking alternative financing options, such as crowdfunding, peer-to-peer lending and fintech platforms. The reason for the decline in traditional financing is unknown. Only 34% of small businesses applied for a loan in 2021. In 2019, approximately 43% of small businesses applied for a loan-a number that dropped to 37% in 2020. Despite the availability of funds, the percentage of firms seeking traditional financing has declined in recent years. Per the Federal Reserve’s latest report, the average small business loan amount is approximately $663,000. This heavy reliance on banks could be due to a lack of knowledge of other financing options, such as alternative lenders or angel investors. The majority of them rely on either a large or small bank as their financial services provider. Moreover, only 42% of small businesses have their financing needs met, illustrating a significant gap in financial services for these businesses. This increase of almost 20 percentage points since 2019 is a trend that highlights the ongoing struggles small businesses face. This number has risen considerably over the past few years, with 85% of small businesses experiencing financial difficulties in 2021 alone. According to the Federal Reserve Banks’ Small Business Credit Survey, a staggering 59% of small businesses reported being in fair or poor financial condition. Small businesses are the backbone of many industries and communities, but recent data shows they face significant financial challenges. On BlueVine's Website Small Business Financial Statistics
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