Expanding a business can be a special time in the life of an entrepreneur. Bringing a vision into reality to where it can then begin to grow is an achievement a business owner can take pride in.*
One reason many small business owners fail to grow is due to a lack of funds. Some businesses can finance expansion through cash flow, but many need financing.
Pepperdine University polled 2,693 business owners between June 29th and July 17th, 2015. The results were reported in the University’s Private Capital Access Index.
The study reports that 60.3% of small and medium sized businesses with any financing needs will tend to use funds for growth. 64% of businesses under $5 million in sales, who will seek capital in the next 6 months, will likely use the money for planned future growth or expansion. Additionally, 51% of those businesses looking for capital cited growth or expansion, (including acquisition) as the main reason for seeking financing.
The study also reports that 67% of businesses with under $5 million in sales find it difficult to raise new external financing. 48.9% of these businesses attempted to acquire a loan through a bank during the prior 3 months, with only 30.1% finding success.
Bank financing can be accessible to some businesses, but the results clearly show that most small business owners will need to look further to access the capital they need.