Smallest businesses still struggle with financing

NEW YORK (AP) — The nation's smallest businesses are still treading water because they're struggling to raise financing, according to a survey released Tuesday.

In the survey of businesses by researchers at Pepperdine University and Dun & Bradstreet Credibility Corp., nearly two-thirds, or 63 percent, said the current climate for business financing is restricting their growth opportunities. Fifty-five percent said it's hurting their ability to hire.

The survey questioned nearly 1,100 businesses with revenue under $500,000 a year. The survey was conducted from April 4 to April 26.

The survey results were on a par with those from a fourth-quarter survey Pepperdine and Dun & Bradstreet Credibility Corp. conducted of small business owners with revenue under $5 million. Nearly three-quarters of the smallest companies said in April it's difficult to get investment money or loans. At the end of last year, 73 percent of all small businesses said loans were hard to get.

Fifty-two percent of the smallest businesses said they don't plan to seek financing in the next six months. At the end of last year, 57 percent of all small businesses said they don't plan to seek financing in the first half of 2013.

In the past three months, only 24 percent of the smallest companies sought financing. And three-quarters said they had turned to personal savings or investments to help fund their companies. The most frequently tapped sources of funding remained family and friends, credit cards and personal loans — a trend that was in place long before the recession, but that has intensified since 2008.

"The results from this second quarter study show lack of financing consistently hinders growth at the smallest companies, which in turn restricts their ability to hire," said Jeff Stibel, CEO of Dun & Bradstreet Credibility Corp. The company provides credit ratings on businesses.

Researchers at Pepperdine's Graziadio School of Business and Management conducted the survey using companies in Dun & Bradstreet Credibility Corp.'s database.

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