Small businesses form the backbone of the U.S. economy. Companies with 20 or fewer employees make up almost 90% of all U.S. firms, and while they may not bring in the type of revenue large corporations do, they certainly hold up their local economies in significant ways. Besides, even the biggest corporations started out as a small business.
So why is lending to small businesses so anemic? There has been a steady decrease in loans to small businesses over the past decade or so, undermining the great influence small businesses can have on their communities. With political battles and economic forces sending many small businesses into a tailspin, we must remember why funding these ventures is so important to protecting our future.
At Currency we see fueling small and medium businesses as our principal mission. Not only do we view supporting these organizations as good business, we also see it as critical to the health of the overall economy. Here are a few reasons lending to small businesses is so important to us:
Most Americans attribute job creation to small businesses; in fact, 57% of them feel that small businesses create more jobs than large corporations and the government. And they aren’t wrong – the data indicate that small businesses spur job growth nationwide.
Small businesses spur economic growth by keeping the populace employed and contributing to society. Small businesses added 64% of the new jobs created between 1993 and 2011, and more than 50% of the U.S. working population works in a small business.
In essence, we can thank small businesses for stimulating the economy and keeping people employed – a clear reason to invest in them if we want to invest in the country’s continued prosperity.
Giving Back to Local Communities
In certain communities, small businesses provide a huge amount of support and revenue.68% of a small business’s earnings return to the local economy, which means customers spending money on those businesses’ goods and services are essentially investing in their own communities. Successful local businesses also pay higher local taxes on their revenues, streaming money directly into local entities like fire departments, roads and schools. Basically, small businesses provide a significant economic and infrastructural foundation for the areas in which they reside.
Further, communities with many small businesses are proven to be healthier beyond financial wellness. A national study showed that towns with greater numbers of small companies have lower death, obesity and diabetes rates than those with many large businesses. The large businesses don’t lose out, either – they often depend on their smaller counterparts for outsourcing different business tasks.
Without the influence and support of small businesses, many local communities would be much worse off than they are.
Adaptability and Resilience
“Grit” is not a word we usually hear applied to a company. However, small businesses embody that characteristic due to their resilience during tough times.
Despite our difficult economic environment, small-business profitability and employment are still increasing. This is largely due to connections with international entities that stabilize sales, as well as more effective competition with larger corporations because small businesses meet the niche needs of their customer base. This resilience makes for safer investments, as you don’t need to worry as much about steep revenue declines.
Quick adaptability and response are another reason why small businesses can be a safe investment. Since these companies are often customer oriented, they gain loyalty among their customer base, which benefits them in leaner times. They also just have less to lose than larger corporations, making it easier for them to act on quick decisions in response to a crisis.
In the tumultuous world we live in, it’s a good idea to invest in something a little more stable.
Some of the world’s greatest innovators started out in small business. Innovation often involves an element of risk that larger companies might hesitate to take. After all, why take a risk when your company is large, established and doing well in its industry? But small businesses don’t always have the luxury of playing it safe.
Naturally, this promotes innovation. Small businesses that are fighting to survive are going to hire innovators and take a chance that their ideas will become the next greatest product or an improvement on existing products. This can be demonstrated by the fact that small businesses produce more than 16 times more patents per capita than larger companies.
The desire to produce the next great thing, coupled with the lack of red tape and bureaucracy that often hamper large corporations, makes small businesses a breeding ground for novelty and innovation. Even if these small businesses don’t achieve the next great thing, chances are they’re going to come up with many smaller, but still transformative, products along the way. Funding this innovation can help push us to useful developments.
Despite the importance of large corporations to the American economy, the truth is that small businesses still reign supreme in terms of stimulating employment and supporting local communities. It would be a mistake to miss the opportunity to fund their continued success.
In conclusion, Currency believes in small and medium businesses. We understand why supporting you is so important and we’ve built our entire business model so that we can help an ever-increasing number of business owners with the financing they need to grow and prosper. We believe in you and have developed technology that helps us get you the funds you need faster than anyone else. If you have any questions regarding small business financing, don’t hesitate to reach out to us at Currency. We’re always available for a call at 877-358-4595, and would love to answer your questions about growing your business.