LOS ANGELES, Dec. 14, 2016 /PRNewswire/ -- Demand for
capital hit a four-year high for small businesses (<$5M in revenue) according to the fourth quarter
results of the Private Capital Access (PCA) Index report by Dun
& Bradstreet and Pepperdine Graziadio School of Business and
Management. Demand for capital jumped four percent from last
quarter and 13 percent from a year ago (Q4 2015). However, access
to capital for small businesses has not kept pace with the growth
of demand: year-over-year access is up nearly seven percent, while
down by less than one percent since last quarter.
At the same time, bank loan success rates reached an all time
low for small businesses and the success rate between small and
mid-sized businesses (between $5 –
10M in revenue) reached its largest gap since the study began in
2012. The Q4 results show that 29 percent of small businesses
successfully secured a bank loan, compared to 87 percent of
mid-sized businesses. The peak success rate for bank loans was 43
percent of small businesses compared to 76 percent of mid-sized
businesses in Q4 2014. The low success rates for small businesses
may reflect bank skittishness over businesses with fewer collateral
assets. This could account for why a large percent of small
businesses were seeking loans from friends and family (46 percent)
and crowdfunding (23 percent) in the last quarter.
Both small (24 percent, up from 20 percent one year ago) and
mid-sized businesses (37 percent, up from 28 percent one year ago)
reported economic uncertainty as the lead reason preventing hiring.
Businesses also reported that a Federal interest rate hike could
negatively impact their operations, with 31 percent (up from 29
percent in 2015) of mid-sized businesses reporting a Federal
interest rate hike could restrict their ability to secure contracts
and expand to new markets.
Despite the reported lack of economic confidence, more small and
mid-sized businesses are planning to seek financing than a year
ago. Thirty-five percent of small businesses and 27 percent of
mid-sized businesses are planning to raise capital in the next six
months. Sixty-five percent of small businesses cited growth or
expansion (up from 60 percent in 2015) as the reason for seeking
capital, versus 56 percent of mid-sized businesses (up from 46
percent in 2015). Working capital fluctuations (62 percent small;
57 percent mid-sized) and increased demand (62 percent small; 46
percent mid-sized) rounded out the top three reasons for raising
capital.
"This survey was conducted before the election. The economic
uncertainty that comes with an election season is the driver behind
small business' lackluster expectations going into the new
year," said Dr. Craig R. Everett,
director of the Pepperdine Private Capital Markets Project. "This
quarter's numbers, however, tell us that regardless of the unknown,
small business owners plan to seek capital to fuel growth within
the next few months, and that demand for capital has hit a peak
since 2012. This may indicate growth in the small business sector
in 2017."
Women-Owned Businesses Report Restricted
Growth
Compared to the whole sample, women-owned businesses
report that the current business environment is restricting their
ability to grow (69 percent vs. whole sample 57 percent) and hire
new employees (62 percent vs. whole sample 49 percent). Women-owned
businesses perceive that it is more difficult to raise capital and
both equity financing (71 percent vs. 62 percent whole sample) and
debt financing (76 percent vs. 61 percent whole sample). The Q4
results show that women-owned businesses are in fact even less
successful at securing bank loans than other businesses, with a 26
percent success rate compared to 37 percent for all businesses.
"Women-owned businesses employ nearly eight million people in
the U.S. and are a vital part of the national economy," said
Jeff Stibel, Vice Chairman of Dun
& Bradstreet. "It will be critical for our economy to overcome
the roadblocks that are preventing women-owned businesses from
growing, including the continued challenge in securing access to
capital."
Women-owned businesses are seeking to raise capital in the next
six months at a higher rate than the whole sample, with 40 percent
reporting that they plan to raise capital, compared to 34 percent
whole sample. The leading reasons for the needed capital reported
by women-owned businesses include financing future growth or
expansion (74 percent) and growth due to expected increase in
demand (70 percent). Sixty-nine percent of women-owned businesses
cite working capital fluctuations as a reason for demand in
financing compared to 60 percent of whole business sample.
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 Q4 2016 survey is
based on 1,593 completed responses collected October 13 –
October 31, 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 our 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 Graziadio School for Business and
Management
A leader in cultivating entrepreneurship and
digital innovation, the Pepperdine 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 and Santa
Barbara 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,
Instagram, and LinkedIn.
Contacts:
Pepperdine 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