Once a quarter, Pepperdine University’s Graziadio School of Business and Management and Dun & Bradstreet poll small and medium-sized businesses across the nation to learn more about those companies growth and access to capital. Overall, the Q2 2015 PCA Index findings revealed that optimism and financing success among small and medium sized businesses are the highest they’ve been in three years. Mid-sized businesses seem increasingly optimistic about their ability to secure funding, which Jeff Stibel, Vice Chairman of Dun & Bradstreet, believes “is a strong indication that smaller businesses have joined their larger peers in the economic recovery.” Here are the Q2 highlights*:
- Over the last 12 months, 48 percent of small businesses surveyed have been reporting an increase in revenue, which is a 4 percent increase from 2012.
- Demand for funding by small businesses has increased 9 percent since Q1 2015, reaching the highest demand since Q4 2012.
- Access to capital by small businesses has increased nearly 8 percent since the Private Capital Access Survey began in 2012, and has increased 1 percent since Q1 2015.
- Small business loans still appear in demand at a higher rate than which they are filled. Of the businesses surveyed, 61 percent feel their growth opportunities are restricted, which is 10 percent higher than this time last year, and 24 percent of businesses surveyed feel their ability to hire is restricted, up 9 percent from this time last year.
- Banks are awarding only 20 percent of New York small business loans, which is far below the national average of 36 percent.
- New York small businesses are not only planning to hire at a rate higher than the national average (70% vs. 62%), they are planning and in need of financing at higher rates than the national average as well (36% vs. 33% and 67% vs. 50%, respectively).
- Businesses in New York are feeling constrained – 57% feel their growth opportunities are restricted, and 51% feel that their ability to hire is restricted.
- New York small business owners may have to turn to their personal assets for help – 39 percent were forced to rely on their personal assets to fuel their business.
- 36 percent of California small businesses that applied for loans in Q2 2015 were successful, compared to the national average of 37 percent.
- Although the loan success rate is lower than the national average, California small business loans have seen an increase of 5 percent since Q1 2015.
- Although growing, California small business loans are still in short supply, and it may be causing small businesses to feel restricted: 60 percent of those surveyed feel their growth opportunities are restricted, and 51 percent feel their ability to hire is restricted as well.
- In Q1 2015, over a third of California small businesses surveyed were forced to expend their personal assets to fund their business needs.
- According to the most recent PCA Index, banks awarded less than one-fifth (19%) of Florida small business loans (compared to 37% nationally).
- This inability to access capital could be why small businesses are feeling constrained; 62 percent feel that their growth opportunities are restricted and 48 percent feel that their ability to hire is restricted as well.
- The lack of access to capital may be troubling for Florida businesses, especially considering the rates at which they plan to grow. At 68 percent, Florida small businesses are planning to hire above the national rate (62%). Almost two-thirds of business (62%) are also in need of financing to fund planned growth, which is greater than the national average (50%).
- 38% of small businesses surveyed funded their business needs through use of their personal assets.
- Though lower than the national average (62 percent), a significant portion of small and medium sized businesses (59 percent) in Texas are planning to hire in the next 6 months
- This planned growth may be hindered, however, by the inability to successfully obtain a small business loan. Only 27 percent of business owners who applied for a Texas small business loan were awarded one, compared to a 37 percent success rate nationally.
- Many Texas business owners are feeling constricted: 56 percent of businesses surveyed feel their opportunities for growth are restricted, while 48 percent feel their ability to hire is restricted.
- Businesses in Texas are seeking outside funding less than the national average (23% vs. 26%), but are also using personal assets at a lower rate (31% vs. 36% national average).
PCA in the News:
*Pepperdine Private Capital Index: PCA Index Survey Responses. Second Quarter 2015. Survey results based on 2,469 national responses. ©Dun & Bradstreet, Inc. 2016. All rights reserved.