Access to capital a growing concern for small businesses, according to Dallas Fed poll

For immediate release: April 15, 2016

DALLAS—Access to capital is an increasing concern for small-business owners responding to a Federal Reserve Bank of Dallas poll.

Among business owners responding to the Texas Small Business Needs Assessment Poll, 18.4 percent of respondents cited capital concerns as the top factor limiting growth. That percentage was even higher among minority- and women-owned enterprises (MWBEs). In fact, nearly 25 percent of MWBEs reported that access to capital is their largest growth concern. An increasing percentage of MWBEs also reported not applying for credit due to fear of rejection.

“Concerns about access to capital have grown the last three years and are now at an all-time high,” said Emily Perlmeter, Dallas Fed community development analyst. “MWBEs seem to be hit the hardest by inadequate sources of capital; this problem is now the top barrier to growth for these businesses.”

The skills gap remains the highest-ranked concern among respondents, with 21.5 percent saying that “finding the right employees” was the biggest factor limiting growth. Sales and marketing was the skill set most in demand, followed by interpersonal skills and punctuality/reliability.

The concern about talent is supported by current data on the Texas workforce, which shows that 65 percent of Texans 25 and older have no associate’s or four-year degree, according to the report. Meanwhile, research shows that by 2018, a majority of jobs will require at least some college education.

Overall, small businesses saw weaker growth in 2015, with fewer respondents reporting increases in sales or overall business opportunities. Despite this drop, all index measures of performance remained positive, and most respondents expressed optimism about the future. In fact, the index of expectations for sales/revenue for 2016 was the highest it has ever been.

The poll, conducted by the Federal Reserve Bank of Dallas in partnership with the Texas Small Business Development Center Network, asked more than 1,500 small-business owners from more than 136 counties across Texas about firm size, performance, financing, challenges and employee skill gaps. The majority of businesses sampled were microbusinesses, with one to five employees, and 37 percent were MWBEs. Poll data were gathered the last three months of 2015.

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Media contact:
Jennifer Chamberlain
Federal Reserve Bank of Dallas
Phone: (214) 922-6748
Email: Jennifer.Chamberlain@dal.frb.org