Access to capital increases for small businesses

April 7, 2014

A new report from Pepperdine Private Capital Access Index shows that access to capital for businesses of all sizes increased in the first quarter and is at its highest since the inception of the report in Q2 2012.

According to a news release, the quarterly index by Pepperdine University's Graziadio School of Business and Management and 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 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, the release said.

Lower middle market companies (businesses with revenue between $5M to $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.

The survey results also showed that approximately 55 percent of businesses that 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.

Topics: Financial Management, Financing and capital improvements, Operations Management

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