BlueVine Founder Eyal Lifshitz
BlueVine Founder Eyal Lifshitz

BlueVine survey shows lack of financing restricting SMB growth

The results of a new survey of close to 700 business owners commissioned by invoice financing platform BlueVine show America’s small and medium-sized businesses (SMB) suffer in many ways because of a lack of financing options.

When it comes to funding and maintaining their business, 75 percent built their companies out of their own pockets while another 7 percent were supported by family and friends. Roughly one in six received bank funding.

Most do not even bother with banks. Only one-third of respondents have ever applied for bank financing and 40 percent of those said they had a bad experience when doing so.

The majority of owners who experienced a business failure (56 percent) have never applied for a business or personal loan. That number increases to 70 percent among those without a business failure in their past.

Not a surprise, but close to 80 percent of small business owner have experienced a cash flow problem, and when they do, 60 percent of them used personal savings to cover the gap as much as possible. Other popular steps are going without pay, cutting staff, or delaying a regular expense like rent or payroll.

BlueVine Founder Eyal Lifshitz
BlueVine Founder Eyal Lifshitz

Taken together, the data suggest a capital accessibility problem, BlueVine CEO Eyal Lifshitz said.

“Despite the amount of capital available today, it’s clear that cash flow challenges continue to be a significant growth and operational hurdle for the vast majority of business owners.”

“The findings of this survey indicate that small business owners in America are in need of accessible, external funding options, and continue to be self-sustaining and reliant, largely out of necessity.”

Sometimes those regular expenses catch business owners by surprise. One in three said they did not anticipate the level of taxation when starting their business. That was closely followed technology costs at 28 percent.

Nearly one-quarter of business owners have experienced a past business failure, and 55 percent of the time it was due to external factors, including funding shortage (18 percent), marketing, sales, or demand problem (17 percent), national economic downturn (14 percent), or generally declining industry (nine percent).

Many external factors can also affect business performance, and the most popular one cited by business owners, at close to 50 percent, was government legislation.