Running a small business requires owners to seek new ways to find working capital to keep operations up and running. As the economy shifts, and technological changes allow individuals or a small group of workers to accomplish what might have previously required many people to do, companies can now thrive on the bare minimum. While innovative new processes and machinery allow businesses to remain small and agile, it also leaves them vulnerable to fickle market trends and other potential hurdles.
The growing microbusiness sector
Microbusinesses – defined as companies that employ five or fewer individuals – are a major part of the U.S. economy. In fact, microbusinesses account for 92 percent of commercial enterprises in the country, according to a recent survey by the Association for EnterpriseOpportunity. Collectively, in 2011, microbusinesses accounted for almost $5 trillion in economic impact and contributed $135.5 billion in tax and fee revenues to local, state and federal governments. In addition, they employed 41.3 million jobs, or 31 percent of all private sector workers. While they might be small enterprises, they play a large and important role in the economy.
Unfortunately, despite the staggering size of the microbusiness sector, institutional support does not necessarily align with the unique needs of this market. The AEO survey discovered that 85 percent of owners at microbusinesses say they think more resources, such as protection against lost income or better access to health care, would give them the tools they need to truly thrive.
Further, the respondents stated that the microbusiness sector is becoming increasingly competitive as more people leave their positions and become contractors and small business owners. As competition in this sector heats up, owners at companies – whether they’re micro-, small- or medium-sized – can gain a leg up on their peers by utilizing alternative lenders to get the crucial capital they need when they need it most.
Using all the resources available
Alternative lending provides extensive benefits for these types of enterprises, allowing them to gain access to a wide range of funding options. For companies that meet a minimum amount of annual revenue – usually $100,000 owners can easily obtain a small business or working capital loan with no pledge of personal assets.
Often, within 24 hours of applying, owners working with an alternative lender can supplement cash flows that have dried up or inject capital into their accounts to bridge periods of unexpected slowdowns or other type of business volatility. Further, according to a survey by Invoice2Go, 67 percent of small businesses said inconsistent cash flow/ earnings was their top concern. When owners have to spend all their time worrying about cash flow issues or whether they’ll have enough money to pay employees or purchase more inventory, they are not focusing on ways to grow the business.
With a simple application process and loans available for less than stellar credit or poor FICO scores, nearly any microbusiness with sufficient annual revenue can find the funding options necessary for long-term success.