LOS ANGELES, June 20, 2016 /PRNewswire/ -- The ability of
small businesses to access needed capital has steadily risen in the
past four years, according to the second quarter results from the
Private Capital Access (PCA) Index by Dun & Bradstreet and
Pepperdine University Graziadio School
of Business and Management. Despite this, the survey found
that small businesses' access to traditional bank loans, while
increasing, still lags behind that of middle market companies,
forcing small businesses to rely on personal assets and personal
credit.
The study showed a 13 percent increase in access to capital for
small businesses (revenues less than $5M) since Q2 2012. The quarterly study also
showed that in Q2 2016, personal funding sources appeared to be
firmly entrenched as mainstream options for small businesses who
accessed capital within the last three months. Thirty-four
percent of small business owners transferred personal assets to
their business over the last three months, compared to just 13
percent of owners of mid-sized businesses (revenues between
$5 million - $100 million). The
leading types of personal assets small businesses relied on for
capital in Q2 were personal savings (72%), personal credit cards
(45%), and cash from sale of personal assets (19%).
Seventy-seven percent of the small business respondents
qualified for personal credit cards for financing in the last three
months, 70 percent qualified for business credit cards, and 68
percent relied on friends and family. By comparison, only 38
percent of small business respondents qualified for a bank loan
within the last three months, compared to 70 percent of mid-sized
businesses.
Crowdfunding, a process of raising funds from many people across
an online platform, is emerging as a major alternative source for
small businesses seeking capital. Nineteen percent of small
businesses that sought financing in the past three months utilized
crowdfunding as a funding source, compared to seven percent of
mid-sized businesses.
"When we began the study four years ago, small businesses were
reeling from the effects of the Great Recession," said Jeff Stibel, vice chairman of Dun &
Bradstreet. "Since then, we have seen steady progress for small
businesses being able to acquire the capital they need, although
the financing is still predominantly not coming through traditional
lenders. It will be interesting to see how the new option of
crowdfunding will affect small businesses, as our study has shown
more eagerness to use that option as compared to their mid-sized
counterparts."
While the study shows access to capital has increased for small
and mid-sized businesses over the past four years, overall demand
for capital is down. Among small businesses, demand dropped sharply
between Q1 2016 and Q2 2016 (38% versus 32%), while for mid-sized
businesses, demand decreased from 23 percent in Q1 to 21 percent in
Q2. Since Q2 2012, the demand index among small businesses has
dropped 19 percent (39 points versus 32 points) and 37 percent
among mid-sized businesses (32 points versus 21 points).
Researchers observed that despite an increase in operational
stability, the economic climate remains uncertain for small
businesses. Fifty-two percent of small business respondents
indicated that the current business financing environment is
hindering their businesses' growth opportunities, compared to 33
percent of mid-sized businesses in Q2 2016. However, 56 percent of
small business respondents in Q2 2016 indicated a desire for
financing in the next six months for planned growth or expansion,
compared to 41 percent of mid-sized businesses.
"Business borrowing habits suggest owners may not see a need for
an immediate infusion of capital," said Dr. Craig R. Everett, assistant professor of finance
and director of the Pepperdine Private Capital Markets Project.
"However, these findings suggest business owners are still feeling
the lasting impact of the recent recession and remain skittish
about the future, as reflected in an abundance of caution when it
comes to the economic environment."
The PCA Index is a quarterly indicator produced by the Graziadio
School of Business and Management at Pepperdine University with the support of Dun &
Bradstreet. The Q2 2016 survey is based on 1,097 completed
responses collected in April
2016.
Download the latest index data here and follow us on Twitter
at @GraziadioSchool, @DnBb2b, and @AccesstoCapital.
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 the Pepperdine University
Graziadio School for Business and Management
A leader in cultivating entrepreneurship and digital
innovation, the Pepperdine University Graziadio School of
Business and Management 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 five Southern
California locations and Silicon Valley, Santa Barbara and Dallas 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, and the Presidents and Key Executives
MBA, as well as executive education certificate programs. Follow
the Graziadio School on Facebook,
Twitter at @GraziadioSchool , and
LinkedIn.
Contacts:
Pepperdine University Graziadio School of Business and
Management
Lisa Perry, (310)
568-2314
lisa.perry@pepperdine.edu
Dun & Bradstreet
Lauren Simpson, (310)
919-2230
simpsonl@dnb.com
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SOURCE Dun & Bradstreet