Access to Capital a Top Small-Biz Concern

January 11, 2011

While encouraging economic symbols continue to emerge, evidence shows access to capital remains a concern for America’s small-business owners.

The recently released Pepperdine Private Capital Markets Study found that only 40 percent of private business owners in the U.S. reported having the resources (capital, staff, etc) necessary for growth; and 71 percent would predict increased revenue if they were able to access additional capital. Overall, private business owners cited “access to growth capital” as the current top business issue.

Of the businesses that were able to access capital, slightly more than 50 percent acquired their funding from friends or family. Only a third of the businesses were able to obtain a bank loan, while ten percent obtained financing from an alternative lender.

The study also found that lenders and investors reject nearly three quarters (73 percent) of loan applications or investment proposals based on a firm’s cash flow. They reject 90 percent of loan applications or investment proposals secured by real-estate holdings.

The Pepperdine Private Capital Markets Study is a semi-annual examination of the current state and outlook for the private capital industry by Pepperdine University’s Graziadio School of Business and Management.

Please click here to access the full survey.