LOS ANGELES--(BUSINESS WIRE)--Results from the latest Pepperdine Private Capital Access (PCA) Index quarterly report show access to capital for businesses of all sizes increased in Q1 2014 from the previous quarter and is the highest since the inception of the report in Q2 2012. The quarterly index by Pepperdine University’s Graziadio School of Business and Management together with Dun & Bradstreet Credibility Corp. measures the accessibility and demand for capital among the nation’s small businesses, as well as the transparency and efficiency of private financing markets. The Q1 2014 PCA Index summary report is available here.
The PCA Index number was 28.3 in Q1 2014, up 1.9 percent from 27.8 in Q4 2013. For comparison, the lowest PCA Index number was 25.6 in Q1 2013. A value of less than 50 for an Index represents a low level of access or demand. Thus, while access to capital remains limited, this latest increase represents a solid improvement.
Lower middle market companies (businesses with revenue between $5M – $100M) saw the most improvement in accessing capital. The Index value for this segment rose to 36.7, which is an 8.9 percent increase from the Q4 2013 Index value of 33.7. Small businesses (with revenue under $5M) also saw improvement as the Index value for this segment rose to 27.1, a 1.8 percent increase from the Q4 2013 Index value of 26.6.
“While fewer companies are seeking capital, those that do are appearing to have an easier time securing funds,” said Dr. Craig Everett, director of the Pepperdine Private Capital Markets Project. “The sign of a truly healthy economy would be large numbers of businesses raising growth capital; however, our Index shows progress and indicates that capital providers are beginning to loosen their purse strings.”
The survey results also showed that approximately 55 percent of businesses who attempted to secure financing applied for a bank loan in the last three months. Of those, 44 percent were successful in securing financing through a bank. When broken out by revenue size, 39 percent of businesses with revenue under $5M and 81.1 percent of businesses with revenue between $5M – $100M were successful in securing bank loans. On the other hand, 26.5 percent of those who attempted to secure financing applied for an asset-based loan and only 28 percent of them were successful.
“Although we are seeing a promising trend of businesses getting more access to capital, we clearly see that larger businesses are benefitting most,” said Jeffrey Stibel, Chairman and Chief Executive Officer, Dun & Bradstreet Credibility Corp. “Smaller businesses, especially those with revenues less than $500,000, which we consider micro-businesses, continue to have a relatively harder time getting access to the financing they need on favorable terms. There’s still a long way to go for America’s smaller businesses.”
Other key findings from the Index include:
- The Q1 2014 Private Capital Demand (PCD) Index number is 32.3, a 1.6 percent decrease from the Q4 2013 demand indication of 32.8.
- Lower middle market companies reported the biggest drop in demand going from a Index value of 26.3 in Q4 2013 to 24.8 in Q1 2014 (5.7 percent decrease).
- 46 percent of respondents say the current business environment is restricting their ability to hire new employees.
- 37 percent of business owners said they transferred personal assets to their business over the last three months.
- 29 percent of respondents are planning to raise new financing in the next 6 months.
- Of those, 53 percent of respondents indicated a need for external financing due to planned growth or expansion including acquisitions.
- Respondents indicated higher confidence for successful financing from family and friends, credit cards, crowd funding, banks or credit unions.
The Q1 2014 Index report was derived from 3,615 completed responses collected from January 29 to February 28, 2014 and contrasted with survey results collected from October 15 to November 6, 2013.
About Pepperdine University Graziadio School of Business and Management
Founded on the core values of integrity, stewardship, courage, and compassion, Pepperdine University’s Graziadio School of Business and Management has been developing values-centered leaders who advance responsible business practice since 1969. Student-focused, experience-driven and globally oriented, the Graziadio School offers fully accredited MBA, Masters of Science, bachelor’s completion and non-degree executive business programs for business professionals, entrepreneurs, managers and senior executives at all stages of their professional and personal development. More information: http://bschool.pepperdine.edu/newsroom
About Dun & Bradstreet Credibility Corp.
Dun & Bradstreet Credibility Corp. is the leading provider of business credit building and credibility solutions for businesses. The company helps businesses establish their credit with a D&B D-U-N-S® Number and provides the only business credit solution available to businesses looking to build, monitor, and impact their business credit and credibility. The company’s headquarters are in Los Angeles, CA with offices throughout the United States. For more information on the company, please visit www.DandB.com. Twitter: @DandB