KEY TAKEAWAYS

• In spite of concerns from business owners about sharing data with their lenders, most respondents would consider sharing digital access to their financial accounts when applying for financing. This is especially interesting because majority of sample is over the age of 50.

• Priorities that inform where business owners seek financing differ by race and ethnicity

  • Black business owners rank confidence their applications will be approved most important

  • Latino/a business owners prioritize speed of response

  • AAPI and white business owners cited low-rates / “Good Pricing” as their highest priority

• Low Confidence in Meeting Common Financing Needs

  • At least one-third of respondents lack confidence to fund an unplanned $5K business expense. More AAPI, Black, and Latino/a entrepreneurs do not think they could fund an unexpected $5K than believe they could.

  • Most respondents report lack of financing would be a barrier to pursuing a contract or purchase order.

  • Most respondents lack confidence that they could fund a marketing campaign, get a volume discount on an inventory purchase, increase payroll or purchase property or equipment.

• Demand is High for Low Dollar Amounts: Two-thirds of respondents sought financing in the last twelve months. Of those who applied for credit, 85% were seeking less than $250,000 and more than half (57%) of respondents applied for less than $50,000. Non-applicants were frequently debt-averse or lacked confidence.

• Entrepreneurs trust their peers most for advice: Business owners report they are most likely to turn to other business owners for counsel and guidance, unsurprisingly preferring those with similar experiences. This often involves engaging with structured networks such as Chambers of Commerce, industry groups, or other related affinity groups. Building on these trusted relationships in authentic and value-added ways is critical for reaching and serving business owners.

• Opportunities to increase awareness of CDFIs and MDIs: Respondents are most likely to be familiar with banks and credit unions. At least one third of AAPI, Black and Latino/a respondents are not aware of /familiar with Community Development Financial Institutions.

• Trust levels vary: We asked business owners the extent to which they trust different categories of financial institutions. Trust levels differ by institution type and race & ethnicity, creating opportunities to expand and build on trusted relationships.

BACKGROUND

• Capital is the lifeblood of business. When small businesses have trust in financial institutions, they are more likely to seek out and obtain the necessary funding to grow and expand their operations.

• With this second annual survey of who small businesses trust, we sought to better understand capital needs of small business owners and to assess confidence in their ability to meet those needs. We also wanted to take a pulse on attitudes toward a range of institutions where these business owners might turn for capital.

• Reimagine Main Street and its partners fielded a national survey in English and Spanish from April 12 - April 30, 2023 to generate insights into needs, attitudes and experiences of small business owners.