Many small business owners report it is becoming increasingly difficult to obtain a bank loan, according to a survey released this month.
Just over 31 percent of small businesses (defined as those with annual revenue of less than $5 million) were able to secure a bank loan in the current quarter, according to the latest Pepperdine Private Capital Access Index. The national survey of business owners conducted between April 8 and May 17.
The 31.6 percent success rate is the lowest in more than two years since it dropped to 29.1 percent in fourth quarter of 2016. The success rate was 43.9 percent in the first quarter of 2019.
While 44.2 percent of small business owners seeking financing tried to get a bank loan, more turned to business credit cards (54.5 percent) or personal credit cards (47.6 percent).
Family and friends (37.7 percent), online business lenders (30.7 percent) and trade credit (32 percent) were also popular funding sources.
Click here to read the report produced by the Graziadio Business School at Pepperdine University with support from Dun & Bradstreet.
If you’ve been turned down for a business loan, Dun & Bradstreet offers suggestions on how to improve your chances:
- Contact the bank to find out why you were turned down. Banks are required to provide a written explanation.
- Improve your credit score and re-apply.
- If your credit history or the length of time you’ve been in business was an issue, think about waiting six months to a year and re-applying.
The Delaware Division of Small Business offers several programs that help small business owners find funding including State Small Business Credit Initiative Participation Loans the newly launched EDGE Grants program.
Visit delbiz.com for more information.