Survey Reflects Struggles in Small Business Financing

Nearly half of small businesses over the last four years have been unable to secure financing, resulting in fewer employees and reduction in benefits for existing workers, according to a survey by the National Small Business Association.
Forty-three percent of small-business respondents said they could not find sources of financing in the form of loans, credit cards or investors, the NSBA said.
Moreover, nearly one in three (29 percent) small-business owners reported that their loans or lines of credit were reduced over the past four years.
“Perhaps even more concerning – nearly one in 10 had their loans or lines of credit called in early by the bank,” the NSBA’s report reads. “Among those whose loan or line of credit was called in early, 19 percent were given less than 15 days.”
The failure to secure financing has caused 32 percent of small businesses to reduce their number of employees, 20 percent to reduce employee benefits and 17 percent were unable to meet existing demand.
The average balance on a loan or line of credit is $256,060, so 15 days can be critical for most small businesses.
Sixty percent of those who reported changes to their loans or lines of credit said the reason was attributed to the bank’s internal risk assessment, and 15 percent weren’t even given a reason.
The majority of small-business owners (60 percent) said they use a large bank. However, small community banks (73 percent total positive rating) and credit unions (60 percent total positive rating) received a majority overall positive rating by respondents.
Large banks came in third with a 47 percent total positive rating.

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