Most small business owners are financing their businesses without the help of loans, despite increased access to capital, according to a report by financial information firm Sageworks.
Only 23 percent of current small business owners have ever applied for a small business loan, while nearly 77 percent have chosen other means of funding.
Instead, 59 percent of owners used personal savings to start their business and nearly 30 percent didn’t need any funding at all. Increasingly, non-conventional sources of funding, like crowdfunding, are also removing barriers to capital.
Most business owners – 63 percent – chose not to apply for a loan because they didn’t want to take on debt. Another 24 percent found alternative funding because they didn’t think they would be approved for a loan.
Sageworks Chairman Brain Hamilton thinks this might be a good thing.
“That businesses have greater access to capital is good news,” he said. “But, it’s even better news that they’re being cautious about accepting that capital and debt.”