Capital One Bank Releases Results of its National Small Business Barometer Survey

MCLEAN, Va.--(BUSINESS WIRE)--Capital One Small Business Banking today released the results of its Small Business Barometer survey for the second quarter of 2010. The quarterly survey polls small businesses across the nation, gauging their current financial condition and business projections for the next six months. Survey results for the second quarter of 2010 suggest that many U.S. small businesses are experiencing stable or improved financial performance, but an increased number of businesses surveyed have grown more cautious about near-term plans for adding employees and spending on business development and investments. For small businesses looking for growth opportunities, survey results suggest that most will have access to any financing or credit needed.

“However, compared to results from the first quarter, small businesses are slightly less optimistic about economic conditions and an increased number of small businesses plan to hold off on capital investment and job growth plans for the next six months.”

“Survey results for the second quarter of this year suggest that financial performance has stabilized or even started to improve for most small businesses surveyed in the U.S., continuing a trend we first observed in the first quarter,” said Robert M. Kottler, Executive Vice President of Small Business Banking at Capital One. “However, compared to results from the first quarter, small businesses are slightly less optimistic about economic conditions and an increased number of small businesses plan to hold off on capital investment and job growth plans for the next six months.”

Outlook and Financial Performance

The survey results for the second quarter of 2010 suggest that the overall economic outlook of U.S. small businesses has weakened slightly compared to the first quarter. In the first quarter, 39 percent of small business owners surveyed said that economic conditions for their business were improving, but this number dropped to 32 percent in the second quarter of this year. Forty-three percent of small businesses report stable conditions and one-quarter (23 percent) say that economic conditions are getting worse. Although their outlook slipped this quarter, financial performance for small businesses continues to show strength. About one-third (37 percent) of small business owners polled report that their firm’s financial position is better than it was one year ago, consistent with last quarter but up 12 percentage points year-over-year. Forty-three percent of small businesses report stable financial performance and only 19 percent say that finances have worsened relative to one year ago, down 17 percentage points compared to the second quarter of 2009.

Gulf Oil Spill

While the survey results suggest that the Gulf oil spill has had a minimal impact on the national sample of small businesses to date, uncertainties surrounding potential longer-term consequences may be dimming the economic outlook of some small businesses this quarter. To date, only 11 percent of small businesses surveyed say that their business has decreased since the spill, and 8 percent say that business has actually picked up. However, in the longer term, one-quarter (25 percent) of small business owners or managers nationally believe the disaster will have a moderate to significant impact on their business and an additional 17 percent say that it’s too early for them to predict whether or not their business will be affected.

Spending and Investments

Despite reporting improved or steady finances, most U.S. small businesses polled plan to hold off on additional business development and investment spending in the near-term. Well over half (60 percent) of small businesses say they plan to keep business development and investment spending at current levels for the next six months. One-in-five (21 percent) small businesses in the survey plan to increase investment spending while only 16 percent say they plan to decrease spending. Small firms are also cautious about hiring plans. Only 26 percent of small business owners surveyed say they plan to add employees to the payroll over the next six months, down 6 percentage points since last quarter but consistent with results throughout 2009. Correspondingly, the percentage of small businesses planning to hold off on hiring over the next six months jumped from 62 percent last quarter to 67 percent this quarter.

Availability of Financing

The survey results suggest that most small businesses continue to have adequate access to credit and financing. Nearly three-quarters (73 percent) of small businesses surveyed report that they are able to access the financing they need while 19 percent say they do not have adequate access to credit and financing. This quarter, fewer small businesses appear concerned about their ability to meet their financing needs. In the first quarter of 2010, 29 percent of small businesses said securing the capital needed to continue operations would be a major challenge over the next six months, but this number fell to 21 percent in the second quarter. When asked about funding sources for financing their firm’s growth, half (50 percent) of respondents say they will seek financing from a bank or commercial lender while 35 percent will rely on personal savings. Fortunately, most small businesses (78 percent) have developed a strong relationship with their bank or banker, which will help them when it comes time to explore cash management and financing options.

Survey Methodology

The findings reported in this release are from a telephone survey conducted by the opinion research firm, Braun Research of Princeton NJ. Braun Research interviewed a nationally-representative sample of 1,905 for-profit small businesses in the U.S., weighted to Dunn and Bradstreet counts of all businesses nationwide by employee size and geography. Samples were also taken in New York, New Jersey, Louisiana and Texas. Small businesses are defined as those with less than $10 million in annual revenue. The interviews were conducted from July 1-21, 2010. All interviews were conducted by telephone at their places of business. One respondent per business was contacted. The margin of error is ± 4.37 percentage points at the 95% confidence level. Interviews were monitored at random. Sampling for this study was conducted using a national sample of businesses drawn from InfoUSA. All interviews were conducted using a computer assisted telephone interviewing system. Statistical weights were designed from the United States Department of Commerce to ensure proper inclusion of all SIC codes.

About Capital One

Capital One Financial Corporation (http://www.capitalone.com/) is a financial holding company whose subsidiaries, which include Capital One, N.A. and Capital One Bank (USA), N. A., had $117.3 billion in deposits and $197.5 billion in total assets outstanding as of June 30, 2010. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients. Capital One, N.A. has approximately 1,000 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia, and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.

Capital One Small Business offers a range of products and services to meet small business needs, including small business credit cards, loans and lines of credit; business checking, money market and savings accounts; and payroll and merchant services. Capital One has a team of bankers committed to deepening our relationships with small business owners and helping them achieve their financial goals.