BPT) - Growing a business requires strategy, persistence and money. Even the most successful business owners occasionally need extra cash to expand their operations. However, getting this funding can be an uphill battle.
That was the case for Kate Lester, owner of Kate Lester Interiors, a luxury design firm based in Southern California. After Lester's business took off, she set her sights on opening a retail space to attract even more clients.
"When the perfect space became available on the Pacific Coast Highway," she said, "we didn't have all that capital in the bank." After reviewing her finances, she decided to apply for a bank loan. Despite being a longtime customer, and having excellent credit and zero debt, she was denied.
This is a common occurrence for small-business owners across the country. According to a 2018 Fed Small Business Survey, nearly half of small-business owners struggle to get the financing they need to expand and pursue new opportunities.
Small businesses continue to contribute to the economy.
A new report from Oxford Economics shows that:
* Small businesses are responsible for 60% of jobs in industrialized countries
* Yet, in the United States, loans to small businesses make up 0.7% of banks' balance sheets
* 13% of business owners who applied for a commercial loan of $25,000 to $100,000 from a bank received at least half the money they asked for
Small-business owners are seeking alternatives. After being rejected by her bank, Lester called Funding Circle, an online small-business loans platform that connects business owners who need capital with investors willing to provide it.
"We thought it would be a longer process because of what happened when we went to our bank," she said.
Online credit providers pride themselves on offering fast, simple financing to small businesses without sacrificing on affordability. For business owners like Lester, maximizing time and resources is crucial.
"Time is something that's super valuable to me," she said. "For me to go to a bank, and maybe get one or two points difference in the interest rate, wasn't worth all the back and forth it would have required."
Today, Lester's sales are up 150% after receiving a loan from Funding Circle in 2017. Her story, while remarkable, isn't exceptional.
Online providers are driving growth and profits for millions of small businesses in the U.S., in turn creating more jobs and boosting the economy. In 2018, businesses borrowing from Funding Circle supported 38,000 jobs and contributed $2.8 billion to the American economy (measured in gross value added).