New York-based crowdfunding platform Kickstarter broke its previous record for the most any single project has raised in April with Pebble, a wrist watch that synchs together with your smartphone. Up to now (the funding round isn’t over yet), the watch has raised a lot more than $9 million from over 61,000 backers. Even though alternative funding is apparently increasing, loan approval rates at the very best banks over the nation have slipped, in line with the latest analysis from Biz2Credit, an online marketplace that matches small and mid-sized businesses with lenders.
Banks with an increase of than $10 billion in assets approved 10.6% of loans in April, down from the 10.9% approval rate in March, in line with the report released today from New York-based Biz2Credit. That also marks an ongoing decline from January and February of the year, when big banks approved 11.7% of small company loans.
Smaller banks, or people that have significantly less than $10 billion in assets — recently the bright spot within an otherwise challenging lending market for smaller businesses — approved 45.9% of loans last month, down from the 47.6% in March and February this season. Approval rates at credit unions also dipped slightly to 57.4% in April from 57.9% the prior month.
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Portion of the decline was related to a decrease in the quantity of loans demanded by smaller businesses and as the terms of loans guaranteed by the tiny Business Administration changed in April, according to Rohit Arora, CEO of Biz2Credit. In order to stimulate the lending market, the federal government had temporarily sweetened the offer for SBA-backed loans for both lender and the borrower. Those “sweeteners” expired in towards the end of March.
However, while all the types of lenders tightened their approval rates, the Biz2Credit “alternative lending” category — including account receivable financiers, microlenders, Community Development FINANCE INSTITUTIONS, and merchant advance loan lenders — held steady and even showed slight gains weighed against earlier this season. Approval rates for alternative lenders held their ground at 63% in March and April, but were up from the 62.5% and 62.4% approval rates in February and January respectively.
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Meanwhile, crowdfunding, the word coined for raising smaller amounts of money from large sets of investors, in addition has increased in popularity as a way to obtain funding for startups, thanks partly to legislation passed earlier this season that’s likely to help the industry grow a lot more.
A written report released today from massolution, a crowdsourcing and crowdfunding research firm, showed that crowdfunding platforms around the world raised $1.5 billion in 1 million campaigns this past year. In 2011, the biggest geographic market was THE UNITED STATES and typically the most popular type of crowdfunding was donation-based crowdfunding, where an investor gives money without expecting anything in exchange.
Readers, how did your business raise money recently?