1.
FINANCING SMALL BUSINESS SUCCESS:
THE RISE OF
ONLINE LENDINGPART OF INTUIT’S DISPATCHES FROM THE NEW ECONOMY SERIES

2.
Small businesses are the lifeblood of the American economy, and financing is the
lifeblood of a small business.
Small businesses rely on financing to power their growth, to invest in new employees,
new equipment, and new opportunities.
THE DECLINE OF
TRADITIONAL LENDING
The traditional small business
financing system is broken.
[Sources: Harvard Business School , National Federation of Independent Businesses].
Time-consuming application process:
33HOURS
Small businesses spend an average of
33 hours on paper work for a bank loan.
34%
Low approval rates:
Only a third get all the funding
they need.
!
20%
Decline in loans being funded:
Small business loans are down
since 2008
!
1

3.
The explanation for the sharp decline in
traditional small business loans is simple. Small
businesses are more vulnerable to swings in the
market than larger companies. Cash flow is
tighter, margins are smaller, and a single missed
opportunity can make the difference between
prosperity and shutting down.
Because of this small businesses represent a
less attractive opportunity for the major banks.
It’s riskier to lend to a small business than it is to
lend to a big, established company. It can be
tough to accurately assess the
credit-worthiness of a small business. And it’s
simply not as a lucrative.
In response to this broken system, a wave of
change sweeping over the small business
lending space. A new breed of online lenders is
emerging with the promise of a streamlined
application process, quicker decision making,
and higher approval rates.
This report is designed to provide a snapshot
into the mindset of a small businesses facing
the loan application process. It examines the
key pain points with the traditional application
process, and looks at how online lending
platforms can fill the void.
The Benefits of Online Lending:
— Easier, faster application process
— More accurate assessment of credit strength
— Higher approval rates
2

4.
56%
average annual growth rate for
small business online lending
over the next five years.
10.5%
percentage of total small
business loans that will come
from online lenders – up from
a mere 1.3% today.
A NEW ERA IN SMALL
BUSINESS FINANCING:
The growth of online lending:
Forecast prepared by Emergent Research on behalf of Intuit in September, 2015.
2015 2016 2017 2018 2019 2020
Online
lending
$83b
$60b
$42b
$27b
$17b
$9b
3

5.
THE CURRENT STATE OF SMALL
BUSINESS FINANCING
Amount of Financing
The average small
business loan is $83,000.
$5,000 or less
$5,001 - $25,000
$25,001 - $150,000
Over $150,000
17%
35%
34%
14%
Uses of Financing
The vast majority of small businesses use
funding to grow their business by
investing in new infrastructure and
taking advantage of new opportunities:
Purchase new equipment
Working capital
New production/service space
Consolidate debt
Hire employees
Cover payroll
Other
35%
29%
13%
7%
4%
3%
9%
Data from survey conducted by Ebiquity on behalf of Intuit in July, 2015.
4

6.
FREQUENCY OF FINANCING
Three or
more times
39%
Twice
29%
Once
32% A majority (66%) of small business owners report their
most recent application for financing occurred within
the past two years:
32%
34%
34%
Within the past year
1-2 years ago
3 or more years ago
A majority (68%) of small
businesses apply for financing
multiple times over the life of
their business:
5

7.
PRIMARY SOURCES
OF FINANCING:
Small business owners use a combination of personal and external
sources of funding to fuel their businesses.
External Sources:
Business credit card
73%
Leasing
22%
Bank loan
52%
7%
Peer-to-peer loan Government loan
15%
Personal Sources
Personal credit card
57%
Loan from
friends/family
27%
Home
equity loan
19%
Personal savings
55%
6

8.
THE LOAN APPLICATION
PROCESS
Average time waiting for a decision on
a financing application:
Basis for Credit Application
Small businesses also use both their personal and
business credit as a basis for applying for financing:
Business credit history
Personal credit history
A combination of business and personal credit history
20%
22%
57%
Small business owners dedicate valuable hours to
the process each time they apply for business
financing. On average, small business owners
spend 33 hours searching, researching and
applying each time they need a loan. After the
application process is over, small business owners
report waiting for 1.5 weeks on average for a
decision on their financing application.
45%
33%
18%
4%
Less than 1 week
1 week to less than 2 weeks
2 weeks to less than 1 month
1 month or longer
7

9.
34%
of small businesses indicate that
they were able to get all of the
funding they needed the last time
they went to a financial institution.
What Happens When a Small
Business is Turned Down for a Loan?
Top three impacts of not getting approved for a
loan (multiple choices available):
27%
21%
13%
11%
11%
10%
7%
5%
3%
2%
1%
Not enough business history
Too much outstanding debt
Low FICO score
Not enough cash flow
Unable to provide information requested
Less assets than liabilities
Supplied the wrong documents
Recently filed for bankruptcy
Don’t know
Other
Top reasons for being denied?
APPROVAL RATES
35%
Lost employees
31%
Couldn’t pay the bills
Missed opportunity
72%
8

10.
IMPACT ON THE SMALLEST
OF SMALL BUSINESSES
Small businesses with 1-10 employees face unique challenges in navigating the loan
process. They are:
On average, companies with 1-10 employees applied for $47,300 in financing, compared
to an average of $130,800 among companies with 11+ employees.
Used their personal credit history
83%
More likely to rely on their personal credit history:
Twice as likely to say that the loan
application process does NOT work well:
Less likely to apply for funding:
58%
have applied for financing
more than once over the life
of their business,
of companies with 11+
employees have applied for
financing more than once.
83%
!
!
Three times as likely to have been
turned down for a loan!
9

11.
WHAT DO SMALL BUSINESS
OWNERS WANT?
Top priorities for
small business
owners when starting
the loan process:
85%
83%
69%
63%
53%
Approval
Rates and Fees
Lender is a trusted and known partner
Ease
Speed
48%
A minority are confident in
their knowledge of financing
options.
54%
Only a slim majority are
confident in their understanding
of the loan process.
10

12.
86%
84%
80%
84%
11+ employees
Most recent loan amount was over $25K
Use QuickBooks
Need/prefer an advisor to walk them through the process
Companies who are most open
to using this option:
THE APPEAL OF
ONLINE LENDING
of small businesses who currently use
a financial management system, such
as QuickBooks Online, say they would
use a loan application system that
made the process easier by pulling
data directly from their system.
77%
61%
of small business owners say that if the
application process was easier they
would apply for loans more frequently.
73%
companies just starting out or in a growth
stage are even more likely to say they’d
apply for additional funding if the loan
process was easier.
11

13.
THREE KEY TAKEAWAYS
1.
2.
3.
The traditional small business financing system is leading to lost opportunities for
small businesses. Nearly three quarters (72%) of small businesses say that being
turned down for a loan prevents them from taking advantage of a new business
opportunity, hiring additional staff, or investing in future growth.
The smallest of small businesses are hardest hit by the current system. They are
twice as likely to say that the loan application process does not work well, and three
times as likely to have been turned down for a loan.
Small business owners want a simpler option for accessing the funding they need.
77% say they would use a loan application system that made the process easier by
pulling data directly from their accounting system.

14.
$ $ $ $
$
QuickBooks Financing is a marketplace of small business finance products covering the full spectrum of
credit offerings including, short and long term loans, lines of credit, peer-to-peer invoice financing and
Small Business Administration loans.
QuickBooks Financing makes it is easy for small businesses to access tailor-made solutions without
having to complete paperwork or negotiate with lenders.
With the click of a button, small businesses can use the power of their own QuickBooks data to get the
financing they need to take their business to the next level.
QUICKBOOKS FINANCING