2012 Small Business Access to Capital SurveyJuly 11, 2012
According to a new survey released today by NSBA, the 2012 Small Business Access to Capital Survey, cash flow issues continue to plague a significant number of America’s small businesses. Among the findings: nearly half (43 percent) of small-business owners report that they needed funds at one point in the last four years and were unable to find any willing sources.
“Not only have small-business owners been unable to find new credit over the last four years, nearly a third had their existing credit slashed and one in ten had their loans called in early,” stated NSBA President and CEO Todd McCracken. “What’s worse – 19 percent of those whose loans were called in early were given less than 15 days to pay the full balance of their loans.”
Among the small-business owners who reported some change to their credit, 60 percent stated that the reason given was the bank’s internal risk assessment. Underscoring the relatively negative impression many survey respondents expressed with lending institutions, 15 percent said they were given no explanation for changes to their credit.
Small businesses were asked to rate various lending institutions and only small community banks and credit unions received a majority overall positive rating. More than one quarter of small-business respondents said they changed banking institutions in the last four years, with feelings of mistreatment the most common cause.
In addition to traditional financing issues, respondents reported a notable increase in client payment times, and 55 percent of small subcontractors reported late payments from a prime contractor. On a positive note, 19 percent stated they are more likely to seek investors as a result of the crowdfunding exception included in the recently-passed JOBS Act.
“While small businesses’ ability to garner financing has broad implications on the U.S. economy, nearly one third use personal property—such as their home—to secure financing,” stated NSBA Chair Chris Holman, CEO of Michigan Business Network.com and President of The Greater Lansing Business Monthly. “The financing issues small-business owners face don’t end when they close up shop for the day.”