In a 2020 Small Business Credit Survey released by a collective of Federal ReserveBanks, it was reported that 66 percent of businesses faced financial challenges in 2019. Yet 57 percent did not apply for financing or third-party funding.
The top reasons given by those that either did not apply or approved funding but declined it included:
- Cost/interest rate too high
- Unfavorable repayment terms
- Amount offered was too small
- Collateral requirements
- Found enough funding from other sources
When business owners used other funding methods, they often relied on existing business reserves, personal funding resources or personal credit cards.