Introduction: As the global economy faces the aftermath of the Covid-19 pandemic and grapples with rising energy costs, surging inflation, and potential recession, small and medium enterprises (SMEs) find themselves confronted with a series of challenges. Many have come to refer to it as the “cost of running a business crisis.” In these trying times, access to business finance becomes crucial for SMEs, whether it be through credit cards, business loans, or alternative funding methods.
Necessity of Business Finance for SMEs: A recent exclusive survey conducted by NerdWallet, involving 500 senior SME decision-makers, highlights the paramount importance of business finance in the current economic landscape. Shockingly, one-third of the respondents (33%) emphasized that access to business finance will be vital for their survival in the coming six months. Equally concerning, 31% stated that their organizations are currently not financially stable, and 32% admitted to having no financial plan in place to sustain their operations over the next 12 months.
Challenges in Accessing Business Finance: Despite the evident need for financial support, SMEs are facing challenges in securing funds. Among the surveyed decision-makers and managers, nearly a third (31%) had applied for some form of business finance since the beginning of 2022. However, an alarming 20% of these applicants had their requests rejected, even with a ‘good or excellent’ business credit score. Moreover, 41% of SME decision-makers expressed that business finance is now less accessible compared to the previous year.
Exploring Available Forms of Business Finance: Given the increased difficulty in accessing traditional finance options, 30% of respondents have turned to explore alternative funding methods to finance their operations. Here are some of the available options:
Conclusion: In the face of economic challenges, access to business finance has become a lifeline for many SMEs striving to survive and thrive. Although obstacles exist, exploring a diverse range of finance options can help SMEs secure the necessary funds to weather the storm. As SMEs continue their journey towards recovery and growth, understanding and utilizing these funding opportunities wisely will be key to their success.
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