The Hunt for Affordable Loans Isn’t Just a U.S. Problem

Date: September 14, 2016

A recent survey examines the difficult landscape small business owners face around the world when trying to secure lending.

Despite the numerous guidelines and resources available, small businesses are still having a hard time acquiring cheap loans. And that difficulty is global. 

CHECK OUT NFIB’S FINANCING AND ACCOUNTING RESOURCE CENTER FOR EVEN MORE INFORMATION ON LENDING. 

A recent survey from C2FO found only 48 percent of small and medium-sized businesses in the U.S. and Europe can get financing at rates below 8 percent. 

The survey, which included 1,800 small and medium-sized businesses from the United States, United Kingdom, Germany, France, and Italy, found borrowing was priciest in the United Kingdom and the United States, with 42 percent of U.K. small businesses and 47 percent of U.S. small and medium-sized businesses borrowing at a rate of below 8 percent. In France, Germany, and Italy, the percentage of small and medium-sized businesses borrowing at a rate of below 8 percent were 52 percent, 51 percent, and 58 percent, respectively. 

As Bloomberg pointed out, the C2FO report somewhat contrasts NFIB’s recent findings, which show only 3 percent of small business owners reported in July that their borrowing needs were not satisfied. However, in August, the Index of Small Business Optimism did fall two-tenths of a point to 94.4, well below the 42-year average of 98. 

“Once again, the NFIB survey showed no signs of strength in the small business sector,” said NFIB Chief Economist Bill Dunkelberg. “Uncertainty seems to be the major enemy of economic progress and the political climate is a major contributor to the high levels of uncertainty that we’ve seen. The current economic environment is not a good one for strong or sustained growth.” 

Timing is also a major factor in whether a small business is able to acquire a loan. 

In December 2015, NerdWallet conducted a study where it analyzed nearly four years of data on small business loans from Lending Club, the largest online peer-to-peer lender, to decipher the best time for small businesses to apply for a loan. The study found that November was the best month for borrowers, holding the highest acceptance rate (6.6 percent) and carrying low-risk premiums (15.54 percent). Comparatively, December was found to be the worst month for borrowers, averaging the lowest acceptance rate at 2.9 percent and having the highest average interest rate of the year at 16.34 percent. 

Looking for an affordable line of credit? NFIB members get special access to Kabbage, which has helped more than 100,000 small businesses secure financing.

Related Content: Analysis | Economy | Financing Basics | Loans | National

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