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Nav report reveals smaller businesses are not treated the same when getting financing

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SALT LAKE CITY, Dec 10 2020 / PRNewswire / – Today, Navigation, the smart and simple financing platform for small businesses, outlet a report showing that for very small businesses (VSEs), obtaining financing is much more difficult than for their small and medium-sized counterparts. This gap comes in the form of likelihood of approval, ability to find the right offer, resources to fulfill a request, etc.

Nav surveyed 500 small business owners and looked at their experiences and expectations of corporate finance at a time when access to capital is particularly vital. Small and medium-sized enterprises (SMEs) are already vulnerable, with liquidity reserves of only 27 days, but this year, the struggle for business survival is particularly difficult. In 2020, around 100,000 companies having closed due to COVID-19. For the context, SMEs represent 99.9% of companies in the United States, account for 1.5 million jobs per year and generate around 44% of American economic activity. VSBs make up about 17 percent of this pool, representing the first and most precarious stage of any new enterprise.

“Smaller businesses often come to the table with fewer resources and less credit experience. On top of that, the traditional banking system is not designed to meet their needs. Greg ott, CEO of Nav. “Nav’s new report suggests the same story that was evident after the last great U.S. recession: Smaller companies are the least likely to get the financing they need. Fintech fills the ecosystem gap, but we must collectively improve data connectivity, education, and support services for all SMEs to give them the opportunity to succeed. “

In this report, VSEs are defined as companies with 1 to 19 employees, small companies (SB) are defined as having 20 to 99 employees, and medium-sized companies (MB) are defined as having 100 to 500 employees. .

The main findings include:

  • Smaller businesses are the least likely to apply for a loan.
    • 27% of VSEs have applied for loans in the past 12 months, compared to 41% of VSEs and 61% of MBs
    • Only 6% of VSEs definitely plan to apply for a loan in the next 12 months, compared to 19% of VSEs and exactly 50% of MBs
  • Smaller businesses are the least likely to secured a loan. The likelihood of being approved and for the desired amount increases with the size of the business.
    • 80% of MBs were approved for the funding they requested and got the terms they wanted, compared to 69% of SBs and 68% of VSBs
  • Very small businesses are the least likely to look beyond banking for access to capital. Large businesses are much more likely than small businesses to look to the online marketplace, lending center, or online lender instead of a bank.
    • VSEs were the least likely to turn to an online lender (6%) versus 18% of VSEs and 10% of MBs
    • Meanwhile, MBs were more likely to look at an online marketplace or lending platform: 28% vs. 18% of SBs and only 6% of VSEs

This survey was carried out online within United States by Bredin on behalf of Nav between September 11 and October 1, 2020, among 500 leaders of American companies with 1 to 500 employees. See full results here.

About navigation
Navigation uses real business data to quickly match small businesses with the best loans and credit cards. The leading business financial management application, Nav’s intelligent business finance solution provides insight and opportunities for the day-to-day financial decisions that fuel their success. Nav’s solution is also leveraged by other business service providers to improve their customer experience. Learn more about Nav is available at Nav.com.

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