2 out of 5 Small Businesses Borrowed Money to Start Their Businesses According to PayCycle® Survey
Palo Alto, CA (PRWEB) May 19 , 2009 --With reports of the nation-wide difficulty of obtaining credit pouring in these days, this may drag down new business formation, as 38% of existing small business owners say they borrowed money to start their businesses, according to a proprietary survey data released today by PayCycle, Inc., America's #1 online payroll service. Twenty-two percent got a bank loan or used a credit card for some of the capital needed. The survey also found almost 20% of small businesses continue to depend on credit to run their day-to-day operations.
With this in mind, it's no wonder 43% of respondents said they are at least slightly worried about using credit to run their businesses. National trends show that borrowing money is becoming increasingly difficult. The National Small Business Association (NSBA) president Todd McCracken noted that nearly one-third of small businesses had their credit lines or credit card limits cut in the previous six months and 55% had difficulty securing credit, in a report to the U.S. Senate Committee on Small Business and Entrepreneurship in March.
"Small Business Owners are motivated, ambitious people who creatively find ways to thrive in any economy," said Jim Heeger president and CEO of PayCycle Inc. "The survey found that borrowing money continues to be an important option for many small business owners in order to keep their businesses successful."
Some small business owners, despite the need for extra cash, are refusing to use credit to help fund their business. The survey found 60% did not depend on credit to start their business and 63% do not depend on it for ongoing operations. 13% are dependent on credit during certain busy seasons only and 4% use credit on a one-off basis, for instance, for large purchases. "Mostly everything is purchased cash-n-carry, however, we do not have all the capital we need. We simply refuse to go into debt to sustain the business," commented one of the small business respondents.
Where the money comes from
When small businesses do borrow money, the survey found that they tend to turn first toward local banks or local branches of larger national banks, followed by credit cards and family or some even use a combination of any of these. The survey, conducted between May 4 and May 12, 2009, compiled responses from 198 small businesses randomly selected from PayCycle's broad, national base of over 85,000 small business customers.
About PayCycle
PayCycle is America's #1 online payroll service, serving more than 85,000 small businesses. PayCycle provides an easy-to-use, innovative, efficient service for small businesses, backed by outstanding customer support. PayCycle also powers payroll services for leading financial institutions including Capital One and PNC Bank, and provides client payroll services through many of the nation's accounting professionals. The PayCycle® service integrates with leading accounting programs such as QuickBooks®, Quicken®, Peachtree® and Microsoft® Money. PayCycle's unique "Do-It-With-YouSM" (DIWYSM) technology platform guides customers through the entire payroll process from paycheck to W-2 forms. PayCycle also holds PC Magazine's highest editorial honor for small business payroll, the PC Magazine Editors' Choice Award. Visit www.paycycle.com for a free trial of the service.
PayCycle is a registered trademark, and "Do-It-With-You" and "DIWY" are service marks of PayCycle, Inc. All other product names and trademarks are the property of their respective owners.
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