In an attempt to gauge funding needs and challenges for mid- to large-sized businesses, Bibby Financial Services revealed the who, what and why of commercial finance needs for today’s financial decision makers and their outlook for 2016. This survey is the first in an ongoing series of quarterly surveys designed to capture cash flow outlook, business confidence and seasonal topics for these business decision makers (BDM’s). Of those surveyed, nearly 44 percent sought funding within the past year for reasons including general expenses and cash flow management (47 percent), new equipment (42 percent) and growth strategies (39 percent). Unlike small businesses, these enterprises are tapping in to significant amounts of capital on a less frequent basis. The average amount sought is $640,000 with 44 percent seeking $1 million or more.

Even with More Lending Options Available, Traditional Lenders Still Tops with Established Businesses

Despite the popularity of online lending for small businesses, more BDM’s who work for companies with $5 million or more in annual revenues still seek funding from traditional lenders. Use of asset-based lending (ABL) is second only to traditional bank loans with 23 percent of respondents having used this form of funding within the past year. Asset-based lending describes a business loan secured by collateral (assets) such as inventory, or accounts receivable. Companies within the retail, manufacturing and wholesale distribution industries are the best candidates for this popular form of commercial finance.

The needs of these businesses tend to be complex and require the expertise of a commercial finance company such as Bibby Financial Services. “Companies seeking a million dollars or more to expand their organizations often require a partner that can negotiate a multi-faceted relationship. Solutions for these clients may include revolving lines of credit supported by current assets such as accounts receivable (A/R) and inventory, and term loans supported by equipment and real estate,” says Leigh Lones, CEO of Bibby Financial Services, Americas.

Federal Rate Increase, Payment Terms and Business Optimism for 2016 and Beyond

Increased payment terms can have a significant negative effect on cash flow, with 66 percent of respondents indicating this affects their organization as customers look to extend the amount of time needed to pay invoices. Other topics gauged in this first edition survey include:

• The Federal Reserve’s decision to raise interest rates is not a cause for alarm: nearly 40 percent of respondents are only somewhat or mildly concerned that increases in interest rates will increase their cost of working capital.
• These same decision makers are also not confident that the rate boost will do much to help stimulate our economy: 64 percent said the hike would not fuel our economy. 
• Overall, they’re optimistic about growth and performance in 2016: 43 percent expect modest growth this year, with a smaller percentage highly positioned for growth (16 percent) and 14 percent feeling less positive and expecting a slight decline. 
• The 2016 presidential election is still not a major factor for these businesses: while 45 percent think a new administration will have some sort of effect on their business, a nearly equal amount think it will have no impact (35 percent) or aren’t sure (20 percent). 
• An analysis of respondents’ comments regarding challenges and concerns found that collective economic concerns were almost three times as frequently cited as the greatest challenge facing business decision makers for 2016, with technology being the least worrisome.

About the Survey & Infographic

This online survey was conducted in the U.S. by OnePoll on behalf of Bibby Financial Services between January 7, 2016 and January 17, 2016. The 300 panelists of financial decision makers at businesses with $5-200 million in annual revenue were selected and invited to participate at random from a double-opted in and fully managed online research panel and sourced from online communities and applications through a variety of publishers. OnePoll is an online market research company and corporate member of ESOMAR that adheres to the MRS code of conduct and employs members of the MRS. Established in 2005, OnePoll conducts quantitative and qualitative research providing consumer insights to brands, charities, and organizations daily.

An infographic, entitled “Cash Flow Outlook and SME Confidence Survey for Business Decision Makers” is available for viewing on the Bibby Financial Services website. This survey series will be conducted quarterly in order to track top business concerns, challenges and approaches to business funding.