Securing startup financing is among the biggest obstacles for people wanting to start a new small business in Nevada. That’s according to the results of the 2022 Small Business Challenges Survey conducted by the Nevada Small Business Development Center.
In July and August, SBDC surveyed more than 200 people looking to start a small or scalable business in the state. Nearly 60% of survey respondents said securing debt and capital to finance their business was a challenge.
“Unfortunately, capital funding continues to be elusive for businesses in Nevada,” said Winnie Dowling, Nevada SBDC state director. “While this is nothing new, it puts startups in the uncomfortable position of paying a lot more to get up and running, especially in our underserved communities. Knowing what businesses need is important to everyone.”
Accessing startup capital isn’t a new challenge, and it’s not unique to Nevada.
In 2019, the U.S. Chamber conducted a similar survey nationally and got similar results. An “overwhelming majority” of those surveyed said access to capital was their largest obstacle.
The Chamber survey also revealed that getting startup funding was especially challenging for women and minorities.
Last year, Fundera reported that women make up only a quarter of all business funding applicants and on average ask for $35,000 less than men. A smaller percentage of female applicants are approved for funding as well – 32% vs. 35% for men – and often their loans are smaller, have higher interest rates and shorter terms.
Research from the Federal Reserve also found that Black-owned businesses are 20% less likely to get a loan from a major bank than white-owned businesses.
Experts at the U.S. Chamber cited uncollateralized service-based businesses, a focus on funding “high growth potential” businesses and a lack of community banks as some of the obstacles to obtaining small business funding.
Some Black entrepreneurs also cite a lack of lenders who are minorities as part of the problem.
In addition to funding challenges, 54% of people who responded to the SBDC survey said developing business strategy and marketing plans also hampered efforts.
Existing business owners, who also responded to the survey, reported challenges with attracting and retaining employees, inflation, creating an expansion plan and attracting new customers as their top challenges.
These are the same challenges business owners faced in SBDC’s client survey conducted during the pandemic, from March 2020 through December 2021.
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Karsten Heise is a senior director of strategy and innovation at the Governor’s Office of Economic Development (GOED), which worked with SBDC on the business challenges survey. He said results from the survey will help GOED create the technical assistance application for the State Small Business Credit Initiative Program (SSBCI).
The SSBCI program was funded with $10 billion through the American Rescue Plan Act to improve access to small business capital and increase job opportunities.
“It will help with the design of a data driven approach for a program structure and service provision offering technical assistance to socially and economically disadvantaged individuals and very small businesses,” Heise said.
In August of this year GOED said it would provide SSBCI matching funds to 40 companies in the state that participate in StartUpNV, a statewide business incubator and accelerator that provides mentorship and access to capital investors.
Both GOED and SBDC have a number of programs to support small business owners, including funding opportunities, workshops, training and technical assistance.
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Kristen Hackbarth is a freelance editor and communications professional with more than 20 years’ experience working in marketing, public relations and communications in northern Nevada. Kristen graduated from the University of Nevada, Reno with a degree in photography and minor in journalism and has a Master of Science in Management and Leadership. She also serves as director of communications for Nevada Cancer Coalition, a statewide nonprofit. Though she now lives in Atlanta, she is a Nevadan for life and uses her three-hour time advantage to get a jump on the morning’s news.