The Summer 2012 Retail Capital Small Business Barometer focused on small business owners within the hospitality sector and their experiences regarding access to working capital.
- Almost half of the respondents that participated in the survey listed access to working capital as their biggest business challenge, followed by a lack of customers (15%). What was interesting to note was that the most common uses for a lump sum of working capital were opportunistic: 44% of those surveyed selected ‘desire for expansion’ as a reason for expenditure of working capital, with 37% citing equipment and 37% renovation. Only 22% identified that they would utilise the lump sum for debt settlement.
- Although banks and traditional financial institutions were found to be the preferred sources from which to obtain working capital, alternative funding providers (non-traditional loans) were reported to be the second choice. 11% preferred to obtain business loans from friends or family, and only 7% said that they would use their credit cards.
- Three out of every 10 respondents were found to have previously had their application for a business loan declined by a bank, and only 39% of those applying for a bank loan rated their last experience as positive. The most common frustrations identified by business owners were ‘lack of flexibility’ (59%), followed by the length of the application process (48%) and the poor approval rate (39%). 38% also said that they found the application process too complex, and as many as three out of every ten business owners were disappointed with the lack of personal service they received.
- Although the main concern regarding non-traditional funding providers was the high payment rates, only 23% believed that these alternative providers lacked credibility.
However, when asked what was the most valued features of a business loan, a staggering 70% said flexible payment terms, followed by ‘no security required’ (41%) and ‘quick turnaround time’ (38%). Only 35% listed the price as the greatest negative factor.
Q: Where is your region of operation?
Q. What is your type of establishment?
Q. What are the biggest challenges facing your business?
Q. What are the most likely expenditures for lump sum working capital?
Q. What are your greatest frustrations when obtaining a loan from a bank?
Q. What do you consider to be the most valued features of a finance product?
Q. Are you aware that you can access business cash advances that offer flexible payment terms and quick application processing, whereby your future card transactions are purchased for a discounted upfront advance today?