Small businesses proactive in search for capital

11/21/2011

Smaller companies are adapting to banks' tightened small business lending policies in order to remain afloat, CreditCards.com reports.

Specifically, multiple studies have shown that businesses are paying off their bills slower, finding alternative sources of money and reducing their debt.

For example, an October 2011 report from Experian revealed that businesses increased the length of their late payments by 16 percent to 7.1 days between September 2010 and September 2011.

Adam Fingersh, senior vice president of Experian's Business Information Services, surmises this trend either signifies a serious revenue issue or cash-management strategies "that favor holding onto cash as long as possible."

Furthermore, a July 2011 survey from the National Small Business Association found that companies have begun looking for alternative sources of money, as 21 percent reported taking out private loans - a 9 percent rise from August 2008.

Another form of alternative credit is from credit unions, where many small business owners have turned for capital lately. The recent Bank Transfer Day resulted in a 30 percent increase in CU members compared to the amount they would typically see join in one day, and also $90 million in new loans, according to the Texas Credit Union League.