B2B Payments

Only 12 Percent Of SMBs Have Used Alternative Finance, Survey Finds

A new survey from alternative lender Reliant Funding found only 12 percent of surveyed small businesses (SMBs) have actually used alternative finance.

The company released the results Tuesday (Nov. 14) and found, more often than not, small businesses aren’t using alternative lending sources. While 49 percent of SMBs said they were familiar with alternative finance, they said they haven’t worked with an alternative finance provider; meanwhile, 39 percent said they haven’t heard of alternative finance whatsoever.

For the minority of small businesses that said they do use this service, they told Reliant Funding they did so because getting a bank loan would take too long. They also cited credit histories, a long loan application process with the bank and getting a bank loan application rejected as other reasons why they turned to alternative SMB lending options.

“The alternative financing sector is a powerful tool for small business owners,” said Reliant Funding Founder and CEO Adam Stettner in a statement. “Our survey reflects the idea that timing and cash flow go hand in hand for small businesses.”

Reliant Funding’s survey also found that 41 percent of small businesses do not have a financial plan in case of emergency. For the companies that do have one, they have between $10,000 and $25,000 in emergency savings, the research found. Reliant Funding cited recent natural disasters in the U.S. as an example of why small business owners must have backup savings.

“In many instances, if there was an emergency or an immediate need for cash, traditional banks could not deliver in the timeframe needed,” Stettner added.

Overall, 93 percent of SMBs said they were either optimistic or satisfied about the current state of their business. Most (56 percent) told researchers that their business is steadily growing, with nearly a fifth (18 percent) planning to invest in marketing efforts and in new products or inventory over the next six months, with 16 percent planning to invest in technology. A tenth said they plan to hire more employees, but nearly a third mentioned that hiring skilled workers is their biggest challenge.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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