The State of Small Business Lending

THE STATE OF Small Business LENDING Small businesses are the core of America's economic competitiveness and employ around half of the nation's workers, but they have been slow to recover from the 2008 recession and have needed financial assistance to regain their footing. OF AMERICA'S 28.7MILLION SMALL BUSINESSES: HALF are home based 23 million are sole proprietorships 5.7 million have employees SMALL BUSINESSES & THE ECONOMY Small business were hit harder than large businesses during the f16421 2008 financial crisis and have been slower to recover. Financial crises tend to hit small firms harder than large firms CHALLENGES IN LOANS FOR SMALL BUSINESSES Most banks say they are lending Loans are key to helping small firms maintain cash flow, hire new employees, purchase new inventory and grow Small business lending continues to fall while large business lending rises to small businesses but major surveys of small business owners point to constrained credit their business. markets. Small businesses Structural barriers are impeding bank lending to small businesses, including claim that loans are still difficult to get during the recovery. consolidation of the banking industry and high transaction costs. New online marketplaces are disrupting the traditional market for small business loans, giving business owners more loan options than just the traditional bank lenders. SOURCES OF CAPITAL FOR SMALL BUSINESS 60% Loans 10% Capital Lease 58% Credit Trade 30% 48% Credit Loan from owner THE ONLINE LOAN MARKET IS SMALL, BUT GROWING FAST. IN 2014: Credit card loans Online alternatives Equipment leasing loans have increased by have increased by have increased by 1% 100% 2% SBA loans have Bank loans have decreased by decreased by 1% 3.1% USE OF PROCEEDS FROM LOAN CAPITAL 53% maintain cash flow 42% reserve/ cushion 33% inventory 29% investment in PPE 29% replacement of PPE 13% debt repayment 11% real estate structuring Business LenderMatch com Sources http://www.hbs.edu/faculty/Publication%20Files/15-004_09blbf8b-eb2a-4e63-9c4e-0374f770856f.pdf