- 11% of small US business owners believe they can use cryptos to finance their businesses.
- Cryptocurrency loans are available for traders to use.
- Businesses are concerned about the volatility of digital assets.
The development of blockchain technology and cryptocurrencies has changed the financial landscape in a big way. Small business owners and startups have found new ways to raise funds and finance their businesses using digital assets. According to CryptoMonday.de, 11% of small business owners in America intend to use cryptocurrency to finance their businesses in the next year.
Commenting on the data, CryptoMonday.de CEO, Jonathan Merry said:
CryptoMonday.de CEO, Jonathan MerrySmall businesses are the backbone of our economy, and it’s encouraging to see them adopt new technologies like cryptocurrency that can help them grow and succeed. I believe cryptocurrency and blockchain can provide small businesses with the capital they need to scale and compete in today’s global economy. I’m confident we’ll see more and more businesses turning to cryptocurrency in the years to come.
Apart from cryptocurrency, 12% of small business owners believe family and friends can help them finance their businesses. But, a large chunk, 51%, believes they can obtain funds through business credit cards. Some small-scale traders hold that their savings are enough to finance their enterprises.
Getting a Cryptocurrency Loan to Finance Your Business
A survey done by the World Economic Forum and the World Bank highlights lack of funding is a barrier to business growth. The inadequacy affects medium-sized and small-sized business entities. A crypto loan might be viable if you need alternatives to conventional loans.
You must maintain a specific loan-to-value (LTV) ratio and hold a certain amount of Crypto to qualify for a crypto loan. The LTV ratio is the percentage of the loan amount relative to the value of your crypto assets. It helps lenders minimize the risks of defaults. The requirements for an LTV ratio and the amount of cryptocurrency you need to hold might vary from one lending platform to another.
Some platforms that offer crypto loans are Nexo, BlockFi, and CoinLoan. The terms and conditions of these platforms also differ.
Cryptocurrency Is Volatile
The volatility of cryptocurrency is a concern for small business owners. The price of Bitcoin and other digital assets can fluctuate dramatically, and this can impact businesses that accept them as payment. For example, if a customer pays for goods or services with Bitcoin, and the price of Bitcoin falls before the business can convert it to fiat currency, the business may lose money.
To mitigate this risk, some businesses choose to hold cryptocurrency payments in escrow until the transaction is complete. This way, if the price of Bitcoin falls, the customer can still pay the original price agreed upon. Still, many analysts believe that as more businesses adopt cryptocurrency, the price stability of digital assets is likely to improve.
