The three biggest obstacles to securing funding for small businesses

Access to funding can mean the difference between success and failure for entrepreneurs and small businesses. Spotcap, the fastest online credit platform, has identified the three biggest obstacles to securing funding and how to conquer them.

1. High search costs
Starting with the search for suitable financial institutions through to the submission of extensive credit applications, looking for credit can be time-consuming and tedious. Business owners spend approximately 25 working hours on the search for credit according to a recent survey by the Federal Reserve Bank of New York. As a consequence, the true cost of securing a loan always includes the time an entrepreneur loses trying to find it.

2. Slow evaluation processes
With businesses continuously moving faster, entrepreneurs need quicker and more flexible access to funding. This is essential when setting up a business. Lengthy delays caused by endless paperwork can quickly result in missed opportunities and the loss of competitive advantages. The decision process for a traditional bank loan often takes up to several weeks. In line with this, most small business owners declare access to capital as their top growth concern.

3. Restricted access to finance
Small business owners in particular often struggle to secure any kind of funding. Current research from the Harvard Business School (HBS) shows that small business lending continues to fall, while large business lending rises. While loans for big businesses have increased since the financial crisis, loans for small businesses have actually dropped about 20 percent. In consequence, a substantial group of business owners is already discouraged from even applying for loans in the first place.

Online credit platforms cut down time and effort
Online platforms have fundamentally changed the application process for loans. Crowdfunding, angel investors, and small business loans enable entrepreneurship at an early stage. Online business lending platforms such as Spotcap accelerate the application and decision-making process to grant access to much-needed financing within hours.

According to the HBS, the banking industry appears increasingly less focused on small businesses. Traditional lenders are not interested in small loan amounts as they are not profitable for them given their opaque processes; even if they do engage, application costs are high and decision processes slow and cumbersome. Leveraging cutting-edge technology, Spotcap can meet the needs of small businesses more efficiently than traditional lenders.