As small business owners get creative in raising capital, the economy is beginning to show steady improvement. It’s no secret that credit is a long-standing problem for small business owners. And while the Small Business Administration is offering more loans to entrepreneurs than before the Great Recession, many are still having a hard time finding the credit they need.
Small Business Majority’s scientific opinion polling revealed 90% of small business owners view the availability of credit as a problem. Furthermore, 61% agreed that it is harder to get a loan now than it was in 2008.
[Editor’s Note: to learn about raising capital, check out our webinar: “Raising Capital: Negotiating with Potential Advisors”. For more on financing options, listen to “Alternative Financing – When the Bank Says ‘No'”.]
Gus Faucher, senior vice president and chief economist at The PNC Financial Services Group, says of the slow economic recovery: “If you would have asked me in 2009 when we were coming out of the recession – we had a stimulus package, we had a deep recession – you should have seen a steep bounce-back. But we just never saw that.”
Despite a shortage of capital, small business is driving economic recovery and job growth in the United States.
In fact, small businesses represent more than 99% of employer firms and employ 58 million of the nation’s private-sector workforce. And, small business job creation often outperforms that of big businesses.
A healthy small business community is crucial to driving economic recovery. In order to boost small businesses’ bottom lines, investors need to ensure entrepreneurs have the capital they need to grow and hire.
As stated, entrepreneurs create more jobs than any other sector of the economy. However, we’re living in an evolving employment landscape. Brick-and-mortar storefronts are being replaced by online retailers, and freelancers are the new version of the nine-to-five office worker.
Many workers are using emerging technologies to leave the traditional workforce, and small businesses and the self-employed are leading this movement. [Editor’s Note: If you’re interested in learning more about small businesses, read “Developing a Branding Strategy for Your Startup or Small Business.”]
The freelance economy is growing and driving economic recovery by stimulating innovation and entrepreneurship in a way that has never been available before. In fact, independent workers now represent more than one-third of working Americans. And those numbers are expected to keep rising, with the self-employed projected to outnumber traditional full-time workers within the next decade according to GigaOm, a technology research and analysis firm.
What’s more, entrepreneurs opened more than 550,000 new businesses in 2013, with eight in 10 of these proving to be successful through 2014. The overall new entrepreneur rate rose in 2014 and 2015, with roughly 550,000 new entrepreneurs coming on to the scene each month.
While these entrepreneurs are changing the workforce, they still experience many traditional barriers when it comes to accessing credit. These barriers are preventing many from driving economic recovery even further.
Entrepreneurs are looking beyond traditional lending to find ways to move forward with new business ideas or to grow their current enterprises. Organizations like Funding Circle are helping match investors with small business owners. And crowdfunding, which allows entrepreneurs to raise capital via the internet, is becoming a popular way for entrepreneurs to address credit problems.
But how much about crowdfunding is hype?
[Editor’s Note: For more on crowdfunding, listen to our webinar “Raising Money for a Start-Up Through Equity Crowdfunding”.]
Rapid growth in this space shows there is a community of individual investors who are interested in and also actively seeking opportunities to support innovative entrepreneurs in all parts of the country. While these new financing options are helping address some barriers to entrepreneurship, there’s still more to be done.
Small businesses and entrepreneurs have long been America’s engine for job growth and innovation. To fully realize the economic potential of America’s primary job creators, investors must ensure greater access and more options for obtaining capital.
It’s time to start investing in the small businesses that will continue driving economic recovery, job creation and competitiveness.
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John Arensmeyer has used his long experience as a business owner to build Small Business Majority into a nationally recognized small business organization and the leading advocate for critical public policy issues facing America’s entrepreneurs—particularly healthcare, access to capital, taxes, retirement/asset building, and numerous workforce issues. The organization is focused on empowering America's entrepreneurs to…
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