Survey: Startup financing often dependent on personal funds

A new survey from online legal solutions firm LegalZoom and the Ewing Marion Kauffman Foundation revealed there are consistent trends among entrepreneurs launching their own businesses, including how they go about obtaining their initial business financing.

The data found 60 percent of business owners spend more than six months developing a business plan before finally launching their company, indicating entrepreneurs are cautious when opening their startups and work carefully to ensure their firms are successful. Sixty percent rely on personal funds to finance their operations - only 20 percent of those starting businesses rely on loans from family members, banks, outside investors or home equity loans. 

"With 80 percent of early-stage business owners using personal funds to finance their companies, founders are decidedly willing to take on risk," said John Suh, CEO of LegalZoom. "However, these business owners need additional financing if they are to succeed in helping drive our economy forward. Of the 60 percent of respondents who said they faced business difficulties, 45 percent cite lack of access to credit."

Which individuals are most likely to take these risks in opening their own enterprises? The data found those from age 30 to 49 started more companies than other age groups. Fifty-seven of those surveyed had industry experience before launching their firms and 44 percent had been business owners in the past. These experiences could impact how some entrepreneurs view the idea of loans or obtaining lending from an outside resource.

Small banks can help business owners obtain financing
With nearly half of these business owners claiming they can't access startup funding, they may be looking for lending in the wrong places. While some entrepreneurs may think their company has the best chance of obtaining loans from a larger bank, this belief could be off and cost a firm financing and opportunities in the long run. Smaller institutions sometimes have the ability to fund new or risky operations their larger counterparts won't provide with business loans. 

Small and mid-sized banks can often offer startups not only more flexible financing options, but more personalized banking solutions that more accurately suit their needs. Having access to these options can sometimes make a major difference for a newer enterprise that may need more individual attention or have specific requirements in regard to its cash management.  

Content presented by Bridge Bank, offering flexible, customized solutions for entrepreneurs.

Getting Started

Find your ideal banker:

Featured Insights

Every time another high-profile company like Target falls victim to fraud, both consumers and businesses scramble to...

Investment volume registers above historical quarterly average ($3.8B) at $7.1 billion. The Silicon Valley continues...

The National Federation of Independent Business released its Small Business Optimism Index for July. Sentiment among...

Inc. magazine spoke to Morgen Newman, who...

Boudin Bakery is one of the oldest businesses in San Francisco, having started in 1849 as the originator of San...

Early indicators show entrepreneurship is growing in the U.S., according to USA Today. Banks are easing credit...

Employment - Men still lag behind women. Overall, men have 699,000 fewer jobs now than they did in December 2007,...

Companies that only do three or four international sales a month are often not aware of the various payment...

Recent News

09/03/14
San Jose, CA – September 3, 2014 – Bridge Capital Holdings (NASDAQ:BBNK), whose...
BusinessWire
07/28/14
NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (“KBRA”) has assigned senior...
07/24/14
San Jose, CA – July 24, 2014 – Bridge Capital Holdings (NASDAQ:BBNK), whose...
07/22/14
Conference Call and Webcast Scheduled for Tuesday, July 22, 2014 at 5:00 p.m....
San Jose Mercury News
06/26/14
The award is a donation from Bridge Bank and Heritage Bank. Mr. Science makes a...
06/09/14
San Jose, CA – June 9, 2014 – Bridge Capital Holdings (NASDAQ:BBNK), whose...
06/05/14
San Jose, CA – June 5, 2014 – Bridge Capital Holdings (NASDAQ:BBNK), whose...
06/03/14
San Jose, CA – June 3, 2014 – Bridge Capital Holdings (NASDAQ:BBNK), whose...
Orange County Business Journal, Jane Yu
05/28/14
San Jose-based Bridge Capital Holdings has pegged Costa Mesa as a key location for...

Twitter

Featured Insights

Featured Insight

Every time another high-profile company like Target falls victim to fraud, both consumers and businesses scramble to...

Featured Insight

Investment volume registers above historical quarterly average ($3.8B) at $7.1 billion. The Silicon Valley continues...

Featured Insight

Boudin Bakery is one of the oldest businesses in San Francisco, having started in 1849 as the originator of San...

Recent News

The National Federation of Independent Business released its Small Business Optimism Index for July. Sentiment among...

Twitter