According to Forbes, 543,000 new businesses are started each and every month. Branching out and pursing your passions to start your own legacy is incredibly impressive and brave. There are a lot of factors that go into starting and running a successful business. One of those things is working capital.
Recently, deBanked wrote an article on the satisfaction of small business owners and their ability to work with lenders to secure working capital for their business. A survey, conducted by the Federal Reserve , shows that 81% of people are satisfied with their online loan experience when it comes from a bank. However, when it comes to satisfaction with online lenders, places like Lending Club, Kabbage, OnDeck, PayPal Working Capital, etc., the satisfaction rate drops significantly down to 46%. They credit their dissatisfaction to transparency or lack thereof. Overall, transparency was the biggest cause of dissatisfaction when it came to large banks, small banks and online lenders alike.
Like deBanked, Small Business Funding believes the results are a bit skewed as the questions are not entirely clear when it comes to the non-banking lenders and what it is exactly they offer to business owners. The survey mentions a few types of financing options including credit cards, leasing, cash advances, trade credit, loans, lines of credit and factoring.
While a lot of these options are straight forward, the definitions surrounding online non-bank lenders can easily be misunderstood. A cash advance could mean a myriad of things. Many people will think about their credit card and their ability to take out cash via the ATM. However, did the Small Business Survey mean the purchase of future accounts receivable? Those would be two entirely different things but were not made abundantly clear via the questionnaire. The term cash advance is all over the survey without really defining what that means, which might allow each participate to bring in their unique connotations of the term and their experiences, thus skewing the results. The survey also asked only once about factoring.
Transparency is crucial when working with a lender for your business. At Small Business Funding, we work hard to ensure that every client walks away with the working capital they need to continue growing their business, while also making sure they understand exactly what they are getting.