Small business owners are in need of more working capital, but also face challenges in obtaining it, according to a new study from Pepperdine University Graziadio School of Business and Management.
The 2015 Pepperdine Private Capital Markets Project Survey Report showed that while 89 percent of privately held businesses have enthusiasm for putting growth strategies into action in the coming year, only 52 percent say they have the funds necessary to accomplish their goals. Forty-seven percent said they were on the hunt for bank business loans or business credit card financing, while 13 percent were turning to friends and family.
“Last year’s frothy private capital markets appear to have calmed down a bit,” Pepperdine Assistant Professor Craig Everett said in a media release. “Lending standards for senior debt seem to have tightened somewhat and private equity deal multiples have pulled back from a year ago. Mezzanine debt is the only capital category that appears to be continuing to increase its appetite for risk.”
Fortunately for small business owners, standard bank loans are far from the only option.
Alternative lenders have been making waves over recent years by providing business owners with quick, short-term loans that often feature more favorable terms than those offered by traditional financial institutions.
In an interview with Inc. Magazine, David Gilbert, founder and CEO of National Funding, explained the advantages of borrowing from an alternative lender.
“Alternative lenders provide easy, quick turnaround for small business needs …,” he said.
The truth is, most times small businesses don’t really need long-term financing. Working capital loans, merchant cash advances, and small ticket equipment leasing can offer the flexibility small business owners need to keep operations running smoothly without the hassle and heavy debt obligation that comes from traditional loan options.