Survey: Small business lending weakened in 2Q

NEW YORK (AP) — Lending to small businesses is down because many companies just don't want to borrow, and those that do are still having a hard time getting loans, according to a survey released Wednesday.

The survey by Pepperdine University's GraziadioSchool of Business and Management and Dun & Bradstreet Credibility Corp. found that nearly 53 percent of the participants wanted to borrow money during the second quarter, down from 56 percent in the first quarter. The survey included nearly 4,700 businesses. Nearly 80 percent had revenue of $5 million or less.

Nearly 80 percent of participants in the survey said it was difficult to raise debt financing, which primarily consists of bank loans. Only 35 percent of the smaller companies surveyed were successful in obtaining loans, compared with 77 percent of the larger ones.

Pepperdine finance professor John Paglia said the survey results confirm that the two commonly cited reasons for weak lending to small business — a drop in demand and lower access to loans — are both in play.

The survey found that 45 percent of respondents had to draw on personal assets to fund their business during the previous six months.

The results are in line with other surveys that have shown weak or erratic lending to small businesses. On Monday, Paynet, a research firm that tracks loans to small business, said lending rose 3 percent during August, the second straight monthly increase. However, lending had fallen through the first eight months of the year.

The weak lending market hampers growth and is keeping many small businesses from hiring. Forty percent of the companies in the Pepperdine/Dun & Bradstreet Credibility survey said they had no plans to hire. And Wednesday, the payroll service company ADP reported that the pace of hiring at small businesses slowed during September.

Dun & Bradstreet Credibility is a credit reporting service for businesses.

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