The nation’s small businesses continue to see only marginal improvements in their ability to access capital, with more than two-thirds of businesses facing problems raising debt and equity financing. The results are part of the most recent Private Capital Access (PCA) Index Quarterly Report (download here), a private capital markets data survey produced by Pepperdine University’s Graziadio School of Business and Management, in partnership with Dun & Bradstreet Credibility Corp.
The study shows a slight improvement in capital market conditions since the end of Q1, a period when U.S. small business owners experienced a reduction in hiring and a decrease in demand for capital.
“This study indicates small businesses are gaining a little ground,” said Dr. John Paglia, director of the Pepperdine Private Capital Markets Project, which oversees the quarterly study, and associate professor of finance at Pepperdine University’s Graziadio School of Business and Management. “We still see the smallest businesses struggling to access capital the most, an indication their recovery is tepid at best. These companies need easier access to lending streams.”
These smallest of businesses, often referred to as micro businesses, still have the hardest time accessing capital, especially those with revenues less than $500,000, explained Paglia.
The most recent study questioned roughly 2,000 businesses nationally. The larger companies surveyed – those with revenues between $5 and $100 million – indicated more confidence in their ability to secure financing of nearly every type, especially when compared with companies whose revenues total less than $5 million annually.
“The Q2 Private Capital Access Quarterly Index report provides encouraging news since access to capital continues to improve,” said Jeff Stibel, Chairman and CEO, Dun & Bradstreet Credibility Corp. “Ultimately, we want to see a faster recovery, since these companies represent the foundation of America’s businesses. Their recovery and stability is paramount to wider economic improvement.”
A joint Pepperdine/Dun & Bradstreet Credibility PCA Index survey finding released earlier in Q2 indicated 63 percent of these companies said poor financing conditions continue to restrict their overall growth. The earlier study also found that the smallest of businesses are increasingly relying on their personal savings and investments, with 44 percent of respondents saying they transferred personal assets to finance business ventures.
Part of ongoing research conducted by the Pepperdine Private Capital Markets Project, PCA Index Quarterly Reports tracks two key indices, Private Capital Access (PCA) and Private Capital Demand (PCD). These indicators gauge the demand for financing of small and medium-sized privately-held businesses, the level of accessibility of private capital and loans, and the health of private financing markets. The Project’s small business owner surveys draw their sample from a database of businesses maintained by research partners Dun & Bradstreet Credibility Corp.
Reports and more information are available at bschool.pepperdine.edu/privatecapital.