Small business more willing to borrow, survey says

READY TO BORROW?: Small businesses are getting more interested in borrowing, according to a survey taken in October and November by researchers at Pepperdine University. The Pepperdine Capital Demand Index rose 1.6 points to 33.9, recovering from a drop in the third quarter. The percentage of small businesses that have tried to raise outside financing in the last three months rose to 28 percent from 25 percent. More than 52 percent of the small businesses in the survey said they wanted to borrow to grow or expand. That was up from 50.4 percent in the third quarter. Nearly 90 percent of the 1,577 survey participants were small businesses, with revenue $5 million or less.

WHY IT MATTERS: Small businesses have been reluctant to borrow since the recession, preferring to pay down their existing debt and take few risks. Many also decided against borrowing because it became more difficult to get a bank loan following the credit crisis of 2008. If business owners are feeling more confident about borrowing and expanding, they may be more willing to hire, which would help the economy grow at a faster pace.

BANKS STILL UNEASY: Nearly 69 percent of small business owners said it was difficult to borrow during the fourth quarter, up from 66 percent in the third quarter, according to the survey, conducted by the Pepperdine Private Capital Markets Project at Pepperdine University's Graziadio School of Business and Management. Thirty-four percent said they had borrowed successfully from a bank during the fourth quarter, down from 37 percent in the third quarter. Banks may have been more cautious because of uncertainty about how the government shutdown at the start of the fourth quarter would affect small companies.

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