Build Relationships and Explore Financing Options to Access Capital
Share current LOB: commercial-corporate-banking
To fund growth, new jobs and capital expenditures, small business owners need access to capital. And yet, 91 percent of successful entrepreneurs cite the difficulty of raising capital as a top barrier to success.1
Many well-positioned growth businesses and promising start-ups don’t meet all the criteria for standard bank loans in terms of collateral, equity or experience. It is critical to the success of your business that you develop a methodical plan for exploring and securing capital.
Accessing capital with agreeable terms can be time-consuming and challenging, particularly for undercapitalized growth companies and early-stage businesses. The path to a sustainable business depends largely in establishing working relationships with local bankers and developing business plans that successfully pay off capital financing. It appears that many business owners give up on the idea of access to outside capital, rather than accept how critical it is for success.
The challenges of access to capital have broad economic implications. Statistics from the Small Business Association show there is a direct correlation between access to capital and job growth. About 46 percent of business owners who seek capital indicate they would invest in new employees and equipment if capital were available at the right terms.2
Owners are leaving access to a viable source of capital on the table for countless reasons, including the fears that they won’t qualify and of getting overwhelmed by the required paperwork. More than 80 percent of owners do not consider flexible and affordable alternative options, such as Small Business Administration loans or supplier financing.3 It’s important for you to explore financing options and build relationships with banks and non-banks with expertise and products for small businesses.
(1) The Kaufman Foundation Entrepreneurship and Economic Recovery Survey of 300 Entrepreneurs, 2009.
(2) SunTrust survey of 423 business owners, 2009.
(3) National Small Business Association 2010 Year-End Economic Report.
About SunTrust Business Owner Research:
SunTrust surveys small business owners and advisors as part of its ongoing business seminars and symposiums. The small business owners attending these events include both SunTrust client and non-client business owners and are representative of the broad spectrum of businesses located in the SunTrust markets. The research cited in this report is extracted from these 5,425 small business owner surveys collected between 2007 and 2011.
This content is educational in nature and is not an advertisement for a loan or business solicitation. It does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
The overall willingness to lend has been strengthening, and banks are eager to make loans to creditworthy borrowers. To successfully access that credit, businesses need to position themselves carefully.