A new study released today shows that 40 percent of small business owners choose alternative financing options over traditional bank loans. One-third of those surveyed secured financing from family and friends, and only 26% resorted to a traditional bank loan. 

According to the study of 535 small business owners conducted by Merchant Cash and Capital, one of the nation's leading merchant cash advance providers, over one-third of those who secured funding used it for increased inventory, 25 percent for website improvements to attract additional online sales, 13 percent for seasonal help and 20 percent as a "last ditch effort" to save their business. 

"With more alternative financing options open to small business owners than ever, we decided to check the pulse on where they are turning for their financing," says Stephen Sheinbaum, founder of Merchant Cash and Capital. "And what we found is that the alternative lending industry has matured and become a viable and smart financing option.  The positive attention around Lending Club's IPO and OnDeck's pending one support that."  

The study found that:

• 40 percent sought cash advances from an alternative lending source 
• 1/3 received cash loans from family and friends 
• And only 26 percent secured funding from a traditional bank 
• Over one-third of those who secured funding used it for increased inventory 
• 25 percent secured funding for website improvements to attract additional online sales 
• 13 percent secured funding for seasonal help 
• Close to 20% used the funding as a last ditch effort to save their business – 10% said saying they would be "dead in the water" without it. 
• 40% of those who secured funding said it will help them break through this holiday season 
• 42% surveyed said they wished they had more money to fund their business