Micro-businesses reported more steady growth in revenue and profitability, but financial challenges have continued to slow merchants down in some cases according to the latest Small Business Credit Survey (SBCS). This report is usually a national partnership of the twelve Federal Reserve banks that track, monitor and reports the performance, loan experiences, financial needs and preferences of businesses.
The essence of the survey is to examine company performance and the challenges they face counting: changes in staffing, annual revenue, and the overall position of the business. SBCS also monitors financing and credit which include: preferred sources for funding, use of credit products and the experiences of seeking and acquiring credit. Lastly, it looks at demographic information which includes; industry type, size of firm and number of workers.
So far, we can celebrate the fact that survey indicated that business enjoyed improved performance in 2017 and are optimistic about better revenue and more staffing this year. The SBCS reported enhanced funding success among merchants who apply, with a more significant percentage receiving in full the amount of funds requested. Moreover, it found higher qualification rates for small loans and line of credit candidates in 2017 than in 2016.
Alternative online lenders are now a favorite borrowing spot for business; the SBCS found an increasing number of applications to web-based lenders in 2017. The Federal Reserve results showed 55% of business seeking credit requested for $100K or less, while 75% asked for $250K or less.
Out of ten applicants, six most frequently required funding to expand their micro-business. Other credit applicants sought financing to solve cash flow issues and manage cost pressures like rising operating expenses and wages.
Large banks still receive the most applications (48%) followed by small banks (47%), and web-based lenders follow (24%). The rest borrowed from pals/siblings, private investors or nonprofits.
Interesting, however, is the fact that not more applications are being accepted as they are being made, more so in large banks. A monthly review known as the Biz2Credit Small Business Lending Index that tracks loan approvals say the application rates are inversely proportional to rates of approval. While large banks receive more loan requests, they approve the least of these applications.
The Federal Reserve reported that online lenders made up almost a quarter of applications, with higher approval rates than large banks. This shows how willing non-bank lenders are to work with company owners with poor credit records.
We are glad most small business bosses reported increasing revenue, profitability and hiring rates. With more solutions to these financial challenges surfacing, hopes are that other challenged business will also get a fair competing ground. Business owners with stellar credit should see credit repair merchant account holders to help them remove this major barrier to acquiring credit.
Author Bio:As an account executive, Michael Hollis has funded millions by using credit repair merchant accountsolutions. His experience and extensive knowledge of the industry has made him a financial expert at First American Merchant.