Small businesses use a variety of financing strategies

11/11/2011

Entrepreneurs are leveraging a variety of means to garner funding, ranging from small business lending to personal property, the Wall Street Pit notes.

There tends to be a difference in funding preferences, however, between younger companies and more established ones. For example, 30 percent of mature respondents said they turned to small business lending from banks for financing. Conversely, startups were more likely to use personal savings and property (67 percent).

"There's obviously still a lot to learn about the business creation process, including the financing of new business ventures in today's economic and financial environment," John Robertson, a vice president of the Federal Reserve Bank of Atlanta, wrote on the website. He believes financial institutions should continue to explore new ways to provide funding to entrepreneurs, regardless of their age.

Other organizations have asserted entrepreneurs are using their personal property as collateral not because they were turned down by banks, but because they prefer that approach. Julie Stackhouse, senior vice president of the Federal Reserve Bank of St. Louis, said that banks have plenty of money to lend, entrepreneurs just aren't asking for it.