Tougher getting loans but businesses upbeat about future prospects

FILE- In this Jan. 8, 2019 photo people are towered by the front facade of a bank in downtown Los Angeles. Small business owners are upbeat about their companies’ prospects even as they have a harder time getting bank loans. That’s the finding of a second-quarter survey of owners by researchers at Pepperdine University's Graziadio Business School and Dun & Bradstreet Corp.. (AP Photo/Richard Vogel, File)

By JOYCE M.

ROSENBERG

AP Business Writer

NEW YORK — Small business owners are upbeat about their companies’ prospects even as they have a harder time getting bank loans.

That’s the finding of a second-quarter survey of owners by researchers at Pepperdine University’s Graziadio Business School and Dun & Bradstreet Corp.

Small business owners expect their annual revenue to rise 10.2%, a more upbeat view than the 9% they forecast in the first quarter; over the previous 12 months, these companies had an average 4.5% revenue gain. Mid-size companies forecast a 7.3% gain, down slightly from 7.5%; their revenue rose 7.7% on average in the past 12 months.

The researchers considered small businesses to be those with under $5 million in revenue. Mid-sized businesses are those with between $5 million and $100 million in revenue.

The results are in line with other surveys in recent months; owners are optimistic about their companies even if credit is harder to get or the economic looks to be weaker. Many owners have faith in their own ability to help their companies’ growth rather than government officials or banks.

Small business owners are optimistic in spite of the fact they’re having a harder time getting loans. Sixty percent said it was difficult to get debt financing, a considerable increase from 52% in the previous survey. Mid-size businesses also found it harder to get loans: a third said it was difficult versus 17%in the first quarter.

Bank loans are harder to get, not surprising given that interest rates have been rising in response to the Federal Reserve’s rate hikes that have been put on hold for the time being. Among small businesses, 31.6% said they were successful getting bank loans, down sharply from 43.9% in the first quarter. It was also more difficult for mid-size companies, with just under 89% reporting success, down from 94.7%.

The difficulty in getting bank loans was also reflected in the fact they weren’t the most sought-after form of financing during the past three months, after having been No. 1 for years. Business credit cards were most popular among all businesses who wanted financing, pursued by 52.8% of the companies. Bank loans were in second place, sought by 45.4%, with personal credit cards in third at 43.2%. But going forward, of the businesses that expect to seek financing in the next six months, 70% said they will likely seek bank loans.

The survey conducted between mid-April and mid-May questioned 848 companies in Dun & Bradstreet’s database. The company compiles credit reports on companies.

Follow Joyce Rosenberg at www.twitter.com/JoyceMRosenberg . Her work can be found here: https://apnews.com

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