Despite the popularity of crowdfunding, a new Manta survey released today, March 24 shows that two-thirds of small business owners don’t think there are enough funding options – and 69 percent think that the funding environment is still the same as it was last year.
The results of the survey show that small business owners approach crowdfunding cautiously. Less than one-quarter of respondents (23 percent) have used a non-traditional lender – and only 2 percent have tried crowdfunding. They may not be aware of crowdfunding and alternative funding options, or they may have misconceptions, according to Manta.
Most small business owners are skeptical of crowdfunding and other options outside traditional loans, particularly those who have obtained traditional financing for their business. Of these respondents, 30 percent aren’t sure about the risks of crowdfunding; 20 percent don’t understand the technology used for crowdfunding and alternative financing sources; and 14 percent said they just do not trust these methods. Others find crowdfunding and alternative financing sources confusing, and others are afraid that it will cause their businesses to fail, at 7 percent and 6 percent respectively.
Small business owners typically are turning to traditional financing. Over 70 percent of respondents have chosen traditional bank loans, savings, credit cards or help from family and friends.
“Small business owners have more diverse options today than ever before when it comes to funding their business,” said John Swanciger, CEO, Manta, in a press release. “However, we’re seeing a gap between what’s available and the perception among small businesses that the lending environment has not improved. Even though traditional bank loans are difficult to secure, small businesses are still apt to rely on them.”
That hasn’t stopped some small business owners from using alternate funding, however. Though less than a quarter didn’t go with traditional financing, 38 percent of those respondents didn’t qualify for traditional bank financing but were very determined to start their businesses. Almost 20 percent went with alternative financing for short-term, small loans.
The small business owners that went with alternative financing tended to borrow in varying amounts, according to the survey. Most – 40 percent – borrowed $10,000 or less. Only 27 percent borrowed $50,000 or more.
Small business owners interested in learning more about their financing options can view a free webinar hosted by alternative financing expert Joseph Hogue, available on-demand through Manta’s online Small Business Expert Series.