Small businesses in the U.S. are continuing to demonstrate optimism about the future, according to results of the latest Dun & Bradstreet and Pepperdine Private Capital Access 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.
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).
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.
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.
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