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Over the past decade, traditional bank lending to small businesses has become harder to secure. Back in 2008 banks lent $57 billion dollars through loans of less than one hundred thousand dollars. Seven years later that number was just $50 billion.

As a group of our customers told us in a recent survey about securing small business funding from banks:

“It used to be an easy process, not so much anymore.”

“It was ok 10 years ago.”

“In years past it was a simple easy process, not so much today.”

Plus, since the Great Recession, the average business loan size has shot up. That means smaller businesses, typically with a few hundred thousand or few million in revenue, aren’t securing funding through banks.

This isn’t necessarily a new trend. Small businesses in the U.S. have struggled to raise working capital for over 100 years.

While some business owners continue to turn to banks when they need small business funding, a growing group is realizing that they do not have to rely solely on banks for their needs. There are now additional and more accessible options.

We asked a few of our customers to share with us what’s led them to seek out other ways to secure small business funding.

While 74% of the small business owners we asked have approached their bank for business funding, and over half have secured small business funding from their bank in the past, only 15% rated their experience as good or great.

The other 85% of small business owners that approached their bank for help with small business funding had a different story to tell.

“We were turned away twice after seeking funding from our bank. They had no flexibility in assessing the seasonal nature of our business or personalizing our experience in any way. It was very frustrating and disappointing, and made us feel badly about ourselves and our business.”

Here are a few of the common bank experiences from the small business owners we surveyed:

There are a lot of hoops and a lot of waiting, only to hear, “No.”

“It seemed like forever before we got the notice to let us know we were not approved for a line of credit. Seems like a lot of hoops to go through.”

“Didn’t want to go through the ‘hassle’ and all the paper work.”

“No funding and a long process.”

A common experience among small business owners is securing working capital from a traditional bank, simply takes too long. Whether it’s the hours invested in gathering paperwork and documentation or the days, weeks, and sometimes months, waiting to hear if they’re approved, most small business owners simply don’t have that kind of time to spare.

It’s very difficult for a small business to meet the requirements.

“They said my credit score was not good enough and debt-to-income ratio was too high. I said, ‘See you later!’”

“A little frustrating. They would not provide us with a line of credit because of our cash flow which is why we needed the line in the first place.”

“I knew that we did not meet their requirements for collateral, cash flow, etc.”

Unlike alternative financing solutions, banks don’t always consider the overall health of a business and factors like cash flow, seasonality, and outstanding receivables. Often, banks base their decision on the personal credit score of the small business owner. This puts many businesses at a disadvantage making it simply impossible to meet the bank’s requirements.

The bank simply didn’t have a small business funding product that was a good fit.

“They had advice but no real solutions. Not many options available.”

“They were unwilling to help, and said they didn’t really have a product like that.”

The products offered by banks don’t always meet the specific needs of small business owners. Often a bank will have solutions geared toward large commercial endeavors that simply don’t work as well for businesses with revenue in the hundreds of thousands of dollars.

From what our customers shared with us, it’s no wonder that with more options than ever, small business owners are choosing alternative means of securing small business funding.

This small business owner sums it up:

“We knew we wouldn’t be approved and didn’t have the time to go through their long process just to be told no in the end anyway.”

With more options, small business owners can find the products that work best for their business.

At Swift Capital, we’ve created an alternative option for small business funding built specifically for small business owners. We’ve eliminated the hoops and the long wait times. We’ve built our requirements around the overall health of a business, not just a personal credit score.

And, we only work with small business owners. As a result, we’re not trying to take a one-size-fits-all product and make it work for every business. We’re proud to have funded over 20,000 businesses over $1.5 billion ─ and we’re just getting started.

Our mission at Swift Capital is to unleash the potential of every small business by providing them with fair and convenient access to working capital. We harness data and technology alongside personalized human expertise to see the true potential in every business. Did you like this post? Tell us what you’d like to see on our blog. Email us at [email protected]

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