If you’ve ever needed more money (who hasn’t?), then you are among a majority of business owners. Approximately one-half to two-thirds of young, small businesses — defined as those with less than 499 employees — use capital injections, according to the U.S. Small Business Administration’s (SBA) Office of Advocacy in a February 2014 report. What’s more, not being able to obtain capital has profound implications for the ability of certain businesses to expand, the report noted.
Small business borrowing amounted to more than $1 trillion in 2013: $585 billion in business loans outstanding, $422 billion in credit from finance companies, and the rest from a mix of sources, the report said. For established businesses, owner investment and bank credit are the two most widely used kinds of financing. Young firms rely heavily on external debt, receiving about three-quarters of their funds from banks via loans, credit cards, and lines of credit, according to the SBA.