Demand for Private Funding Suggests an Improved Business Climate
Company Website:
http://bschool.pepperdine.edu/newsroom/
LOS ANGELES -- (Business Wire)
Small businesses in the U.S. are continuing to demonstrate optimism
about the future, according to results of the latest Dun & Bradstreet
(NYSE: DNB)
and Pepperdine Private Capital Access (PCA) Index.
The Q3 2015 PCA survey showed that for both businesses with annual
revenues under $5 million and those between $5-100 million, private
capital access increased by 2.8%, compared to three months ago, with
demand increasing 0.7%.
For Q3 2015, 49% of respondents revealed their main purpose for raising
financing was for growth or expansion, up from 42% in Q3 2014. The PCA
study also revealed that a greater percentage of respondents indicated
demand for new financing in the next six months, a reflection of
continuing optimism about the economy among business owners. Sixty-two
percent (62%) of respondents planned future growth or expansion in Q3
2015, a 12% increase since Q3 2014, while 56% expect growth due to
increased demand in Q3 2015, compared to 43% in Q3 2014.
“Many of these signs are very positive, pointing to an improved business
climate and resulting in an increased demand for private funding. And if
we look at these results solely, there’s every reason to be bullish on
the U.S. economy,” said Craig R. Everett, PhD, director, Pepperdine
Private Capital Markets Project. “But with new research indicating that
consumer confidence plunged this summer to its lowest level since
September 2014, and the upheaval in global economies, we remain cautious
about the possibility of future volatility and its impact on small and
mid-sized businesses.”
Small businesses turning to alternate financing
The study also found that businesses are increasingly turning to
financial sources other than banks. An increasing percentage of small
businesses also said they attempted to raise financing via personal and
business credit cards: 45% of respondents sought to raise funds through
personal credit cards in Q3 2015 (compared to 34% in Q3 2014); and 55%
attempted to raise financing through a business credit card in Q3 2015
(versus 40% in Q3 2014).
Thirty-four percent (34%) of respondents said they transferred personal
assets to their businesses over the last three months, and 40% of
respondents have financing coming from outside sources. When asked to
identify likely sources of future funding, 31% of small businesses said
friends and family in Q3 2015 (versus 23% in Q3 2014); and 28% of small
businesses said personal credit cards in Q3 2015 (versus 37% in Q3 2014).
“The nexus between credit and growth is critical for small businesses to
succeed. This recent analysis shows small businesses are resilient and
continue to prove they have the resourcefulness to secure funding,” said
Jeff Stibel, Vice Chairman of Dun & Bradstreet. “As small businesses
show momentum in profitability and growth, lending should accelerate.”
Surprisingly, bank lending slid to 63% in Q3 2015 vs. 66% in Q3 2014. Of
the 49.6% of private businesses who sought financing through a bank loan
in the last three months, about 37% were successful. About one third
(25.9%) of those who attempted to get financing applied for an
asset-based loan; only 22% of them were successful.
Small businesses the least successful at securing financing
Businesses with annual revenues of less than $5 million continue to be
less successful in securing a bank loan. Thirty percent (30.1%) of
businesses with less than $5 million in revenue were successful securing
a bank loan in Q3, 2015, compared to a 46.1% success rate in securing a
bank loan in Q3 2014.
Very small businesses fared even worse. Businesses with annual revenues
under $500,000 reported success rates of only 20% with bank loans and
16% with asset-based lenders.
While optimism grows, concerns about the regulatory environment
remain high
Fifty-seven percent (57%) of respondents report the current business
environment is restricting their growth opportunities for business and
48% of respondents report the current business environment is
restricting their ability to hire new employees.
The results are part of the Pepperdine Private Capital Access (PCA) Q3
2015 Index report, a private capital markets data survey produced
quarterly by Pepperdine University Graziadio School of Business and
Management in partnership with Dun & Bradstreet. The purpose of the PCA
Index is to gauge the demand of small and medium-sized businesses for
financing needs, the level of accessibility of private capital, and the
transparency and efficiency of private financing markets.
The Q3 2015 Index report is derived from 2,893 completed responses
collected from June 29 – July 17, 2015, and contrasted with survey
results collected from Q2 2015. Download the latest index data at Pepperdine
Access to Capital and follow us on Twitter at @GraziadioSchool and @DnBUS.
About Dun & Bradstreet
Dun & Bradstreet (NYSE: DNB) grows
the most valuable relationships in business. By uncovering truth and
meaning from data, we connect customers with the prospects, suppliers,
clients, and partners that matter most, and have since 1841. Nearly
ninety percent of the Fortune 500, and companies of every size around
the world, rely on our data, insights, and analytics. For more about Dun
& Bradstreet, visit DNB.com.
Twitter:@DnBUS
About Pepperdine University Graziadio School of Business and
Management
A leader in cultivating entrepreneurship and digital innovation, the
Graziadio School of Business and Management at Pepperdine University
focuses on the real-world application of MBA-level business concepts.
The Graziadio School provides student-focused, globally oriented
education through part-time, full-time, and Executive MBA programs at
our six California campuses, as well as through online and hybrid
formats. In addition, the Graziadio School offers a variety of Master of
Science programs, a Bachelor of Science in Management degree completion
program, Presidential and Key Executives MBA and executive education
certificate programs. Connect with the Graziadio School by following the
links: Facebook,Twitter
and LinkedIn.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150901006312/en/
Contacts:
Pepperdine University Graziadio School of Business and Management
Lisa
Perry, (310) 568-2314
Lisa.Perry@pepperdine.edu
or
Dun
& Bradstreet
Lauren Simpson, (310) 227-9801
SimpsonL@dnb.com
Source: Pepperdine University Graziadio School of Business and Management
© 2024 Canjex Publishing Ltd. All rights reserved.