Capital One: U.S. Small Business Finances Improve in 2nd Quarter

   By Saabira Chaudhuri 
 

Small businesses in the U.S. reported modest but steady improvements in their finances in the second quarter with an increasing number reporting plans to hire staff, according to a survey by Capital One Financial Corp. (COF).

"This quarter's survey results suggest that business is generally holding steady for small businesses; the current economic environment and overall business performance continue to hold their own or improve," said Jon Witter, president of retail and direct banking.

The survey reported a two-year high in the percentage of small businesses planning to add jobs over the next six months, with 37% reporting plans to hire, up two points from last year and three points from the first quarter. Difficulty in finding the right talent to fill available openings remains relatively consistent with last quarter. About 16% of small businesses say they have job openings they are unable to fill, up one point from the previous quarter.

Seven in 10 of the country's small businesses plan to keep spending at the same levels, the highest amount in the last two years. This is a nine-point increase from the previous quarter and five points higher than it was one year ago.

Meanwhile, 15% of small businesses forecast increasing business development and investment spending, down 10 points from the previous quarter and 12 points lower than a year ago.

About 44% of small businesses report that their business financials have remained stable or improved since a year ago, while about 15% of small businesses say their financial position is worse now than a year ago.

Small business perceptions regarding local economic conditions remain relatively unchanged, showing small business owners are less optimistic about business prospects in the months ahead, according to Capital One. Small businesses rate the national business outlook, which measures business prospects over the next six months, at six out of 10 points, with one being significantly worse, and 10 being significantly better. In the previous quarter, this rating was 6.4%.

About a quarter of U.S. small businesses reported they have tried to obtain financing in the last 12 months, the highest that this figure has been over the last nine quarters of survey data.

Among businesses seeking to obtain financing over the last 12 months, the manufacturing and construction sectors represent the highest percentage of those seeking the extra support. About 42% of small businesses report that obtaining financing is harder than it was six months ago, a decrease of 10 points from the previous quarter. Fewer than 9% of small businesses report that obtaining financing is easier than it was six months ago, a decrease of five points from the previous quarter.

Write to Saabira Chaudhuri at [e-mail]