70 Percent of Small Businesses Unaware of Alternative Lending Instead of Bank Loans
Financing Solutions (www.fundmypayroll.com), a leading provider of quick business funding for small businesses, has concluded a study on the applications it receives. The results revealed that 70 percent of all businesses with up to $7 million in sales are unaware of alternative financing options for businesses.
Financing Managing Partner Stephen Halasnik commented, “We had a strong hunch that most business owners believe that a bank is the place to go for financing so we wanted to see how many small businesses where even aware of alternative funding options like Financing Solutions or other non-bank lenders.”
The results of the study showed that 70 percent of the business owners thought that a bank was the only place to go for a business loan. In addition, many of the business owners felt that if they did apply at a bank, that they would get turned down due to the size of their business, the credit record of the owner, the lack of collateral or for a variety of other reasons.
Many of the business owners stated that they have gone to the bank personally to meet with a loan officer or picked up a bank application but felt that the chances of actually getting a business loan was so remote, the time and effort in filling out the application would be a waste of time. Another surprising revelation discovered through the study is that many business owners have held back on growing their business for the fear of missing current payroll or other bills.
Halasnik understands the dilemma of these small business owners. “Over the last 25 years I have built several companies myself and before Financing Solutions, I had no idea that there were plenty of lenders other than banks to turn to for help,” he said.
Halasnik then went on to share a similar situation he faced years ago when he owned a business that was booming but found that he was going to be short on payroll by $45,000 dollars. “Like most small businesses, our cash was tied up in our receivables,” he said. “My team went out and had a dynamite sales month so I called up my bank, who I had an existing relationship with, and told them that I needed an additional $45,000 dollars added to my business line of credit but their response was that they could let me know in a couple of weeks. However, I needed the money in 3 days.”
Luckily, Halasnik had a wealthy friend who loaned him the money to make payroll, which he was able to repay in 2 weeks, averting disaster. Nevertheless, not all small business owners are so lucky and for many, this type of circumstance may cause them to go out of business. “If I had known about the alternative financing market for cash advances then I would have used it in a second but at that time, the bank was the only place to turn to,” Halasnik added. “I never forgot that response from the bank because it was an incredibly stressful time.”
Over the last several years, alternative lenders have picked up where banks are failing. Banks want to deal with big businesses, preferring a risk free client who already has 100 percent of the necessary collateral, and banks want to move at a glacial pace.
Halasnik concluded, “There are a lot of alternative lenders in the industry now who are willing to lend money, who are willing to give you a decision quickly and who are flexible in their payment schedules. I think it is much easier than ever to get a cash advance now for a business. More and more business owners are seeing that banks are not the only place to turn to for funding.”
Financing Solutions (www.fundmypayroll.com) provides emergency business financing to business in 48 hours or less so they can make payroll or for other expenses. The program is specifically designed to be fast, easy, inexpensive, and short term.