COLUMBUS, OH--(Marketwired - Mar 24, 2015) - Even as the alternative financing market is expanding exponentially, a new Manta survey reveals that two-thirds of small business owners do not think enough funding options are available. Additionally, 69 percent feel the funding environment has not improved in the past 12 months.
Small businesses slow to jump on the alternative financing bandwagon, but interest growing
Alternative funding opportunities, including crowdfunding, are growing at a rapid rate, but the survey showcases a cautious approach by small business owners. Most notably, 23 percent have funded a business project using an alternative lender (other than a traditional bank), but only two percent report having ever used a crowdfunding platform. Lack of awareness and persistent misconceptions may be the cause.
The majority of small business owners who have obtained traditional loans note uncertainty regarding crowdfunding and alternative lending options. Thirty percent of respondents are unsure of the risks, another 20 percent don't understand the technology associated with these alternative sources and 14 percent report they simply do not trust them. A small number believe crowdfunding sites and alternative lenders are too complicated, while others fear business failure with less traditional financing methods (seven percent and six percent, respectively).
Traditional financing options still most popular with business owners
Manta's survey revealed that, despite a diversifying lending environment, small business owners overwhelmingly prefer traditional financing options. More than 70 percent of respondents have sought traditional bank loans, savings, credit cards, or help from friends and family to finance their business, while less than a quarter have utilized an alternative lender (other than a bank).
"Small business owners have more diverse options today than ever before when it comes to funding their business," said John Swanciger, CEO, Manta. "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."
Of the small business owners who financed their business through alternative lenders, 38 percent did so because they did not qualify for traditional bank financing. Nearly 20 percent sought alternative lending because they needed a small short-term loan, while nine percent recognized the fast access and convenience associated with alternative lending options, and seven percent wanted ongoing access to a credit line.
The survey results also showed that when small business owners received alternative financing, the amounts they borrowed varied greatly. Most (40 percent) borrowed $10,000 or less. Others aimed higher, with 27 percent borrowing $50,000 or more. Remaining respondents were split -- 17 percent borrowed $10,000 - $20,000 and another 17 percent borrowed $20,000 - $50,000.
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.
About the Manta 2015 Business Funding Survey
Manta polled 1,287 small business owners -- who are members of Manta.com and have claimed their business profile -- between Feb. 19, 2015 and Feb. 25, 2015 via an online survey. The margin of error is +/- 2.88 percentage points. For more on the Manta Alternative Financing Survey, please contact manta (at) highwirepr (dot) com.
Manta empowers small business owners to succeed on their own terms by helping them stand out, connect with customers and grow their companies. Our solutions include a small business directory with millions of unique monthly visitors, proven tools to drive lead generation and a suite of products to manage critical business needs. We strive to inform and inspire through learning opportunities, proprietary research, and a robust online community for dialogue and collaboration. Thousands of business owners join Manta each month. Visit manta.com to learn why.