Over Half of Small Businesses Had Unmet Funding Needs

| By:


The Federal Reserve’s analysis of overall funding efforts for all small businesses demonstrates a market of unmet financial needs. In 2020, a total of 47% of firms met their funding needs, while the other half (53%) still needed capital.

23% of firms saw a “financing shortfall.” They were partially approved but still needed more funds. The other 30% have unmet funding needs because they never applied according to the survey- they’re scared of debt, risk-averse, or don’t meet requirements.

Those that did not apply for funds would have if they were not discouraged by weak sales (44%), insufficient collateral (41%), low credit (33%), and too much debt already (36%).

83% of companies used a bank or small bank as their primary financial service provider, while only 11% said an online lender or fintech was their primary.

Meanwhile, in the funding world, MCAs were only sought by 8% of all funding applicants last year, compared to 89% of firms applying for a loan or line of credit.

Most firms that went for an MCA went with a bank. 85% percent of firms that applied for a loan, credit, or cash advance used a large or small bank. In contrast, only 20% of firms applied to an online lender, falling from 33% since last year.

42% of firms that worked with online lenders or fintech companies were dissatisfied with support during the pandemic. Comparatively, firms that did receive some funding from an online lender were far happier: only 18% were dissatisfied.

Last modified: February 8, 2021
Kevin Travers

Kevin Travers was a Reporter at deBanked.




Category: Business Lending

Home Business Lending › Over Half of Small Businesses Had Unmet Funding Needs


    Dedicated Financial GBC

    BCCUSA

    Spartan Capital

    Arsenal

    SOS Capital

    CapFront

    BizFund

    Velocity Capital Group

    Green Note Capital

    Meridian Leads

    Merchant Financing Leads

    Fenix Capital Funding

    Highland Hill Capital

    Vox Funding

    Splash Advance

    AMA Recovery

    Legend Funding

    Accord Business Funding

    Torro

    CFG Merchant Solutions

    Symplifi Capital

    Main Street Finance Group

    Cashyew

    Pearl Capital

    Better Accounting Solutions

    Global Funding Experts

    Paz Funding Source