U.S. Entrepreneurship Rate at Highest in More Than a Decade


Perhaps encouraged by the rising tide of the national economy, more Americans are engaging in entrepreneurial activity, so much so that the percentage of entrepreneurs as a part of the overall population is at its highest level since before the new millennium began.

Considering the influx of entrepreneurs into the world of small business, financing might be hard to come by, as greater demand and stricter lending standards could severely hamper some entrepreneurs. Looking to alternative routes of financing for small business loans may become a company’s best bet.

Highest rate of entrepreneurship since 1999

According to the 2012 Global Entrepreneurship Monitor (GEM) U.S. Report produced by Babson College and Baruch College, the total domestic early-stage entrepreneurial activity rate last year was 13 percent, the highest such rate since first being tracked.

One of the driving factors behind increased entrepreneurship was better economic sentiment: More than 43 percent of Americans believe good opportunities exist for starting a small business, an increase of more than 20 percentage points from 2011. Overall, 56 percent think they have the resources to start a business today.

Further breaking down the demographics of U.S. entrepreneurs, researchers found that increasingly, women and minorities took up entrepreneurial activity. There are seven female entrepreneurs for every 10 men engaged in small business. Additionally, 16 percent of first-generation immigrants had started an enterprise in 2012; comparably, just 13 percent of non-immigrants did the same.

Financing obstacles still exist

Despite entrepreneurship levels reaching all-time highs last year, the study exposed a number of difficulties small business owners encounter when trying to fund their enterprises.

Just 16 percent of small business funding examined by researchers came from banks, leaving 82 percent of financing to be drawn from personal savings, families, and friends – a dangerous proposition for entrepreneurs.

Researchers found entrepreneurs needed a median level of $15,000 in financing to start their business, yet much of that comes from bootstrapping and relatives and friends. This can create problems for entrepreneurs, as the study noted that American small business owners faced two-thirds the proportion of business disruptions caused by financing when compared to other innovation-driven economies.

Because financing remains a trouble spot for many small business owners- especially when it’s sought from banks – entrepreneurs can consult with National Funding on access to working capital loans and equipment lease financing to build their businesses.

Tags: , , , ,