Bibby Financial Services released survey results  that examine the who, what and why of commercial finance needs and challenges for financial decision makers in mid- to large-sized businesses. This survey is the second 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).
 
The survey finds that 74 percent of BDM’s plan to seek working capital in the next 12 months, an increase of 30 percent over the Q1 2016 survey. Growth strategies top the list of funding needs at 57 percent, a 19 percent increase over the Q1 survey. Additional reasons for accessing capital include new equipment (48 percent) and technology (47 percent).
 
Despite Innovations in Lending Markets Some Business Still Feel the Pinch

Half (50 percent) of the survey’s respondents believe their ability to grow their business is impeded by a lack of access to funding. However, these companies look often, with 41 percent seeking funding at least once a quarter with an average amount of nearly $360,000.
 
These decision makers are increasingly exploring asset-based lending (ABL) with 38 percent considering ABL as a funding solution. This is a significant increase of 23 percent over Q1. Asset-based lending describes a business loan secured by collateral (assets) such as inventory, or accounts receivable. One-third of respondents used this commercial finance tool in the past year. Asset-based lending is a popular form of finance among companies in the retail, manufacturing and wholesale distribution industries.
 
Emphasis on Growth, Equipment and Technology Driving Business Funding Decisions

When forced to choose between the ‘must-have’ and ‘nice-to-have’ needs for working capital, decision makers look at uses that will keep them on track for growth. Adequate capital to support growth strategies is considered a must-have/completely-essential need (59 percent), along with keeping up-to-date with new equipment and technology (55 percent said must-have). Tied to the theme of growth, new product development is also near the top of the must-have list at 31 percent. Lower priority items such as real estate (28 percent), restructuring debt (26 percent) or tax obligations (34 percent) may indicate greater economic stability.
 
Staying on Pace with the Tech Curve

Today’s fast pace of technology often leaves businesses feeling strapped for cash. Sixty-one (61) percent of respondents stated rapid technology changes leave them with an unexpected need for funding. Access to new and updated technology is critical to success, with 98 percent of those surveyed agreeing with this statement, and a majority (85 percent) stating they will seek outside funding to meet this need. Survey respondents placed a high priority on equipment as well, with 91 percent saying it is critical to success. However, one in four need funding to replace obsolete equipment.   
 
“Business leaders report that keeping current with fast moving technology and infrastructure is a high priority, but doing so can be costly and require working capital funds,” said Ian Watson, Chief Executive Officer of Bibby Financial Services North America. “At Bibby Financial Services, we provide companies in a wide range of industries with financial solutions. In the first half of 2016, we funded more than $35.5 million with a heavy emphasis on manufacturing and professional services. These industries rely on cutting-edge technologies and specialized equipment, which often requires access to additional working capital over and above what can be obtained from banks and more traditional lending sources.”
 
Fed Watch: Decision Makers Watching Expense of Working Capital Closely

The interest rate hike instituted by the Federal Reserve earlier this year was not seen as a boon for the economy. 42 percent of respondents state they have seen an economic slowdown since the rates increased. About one-third (29 percent) are keeping an eye on future rate increases, fearing that potential hikes will make it more expensive for them to obtain working capital. However, overall business optimism is up, with 84 percent of those surveyed stating they feel positive about their company’s financial performance - an increase of 24 percent since the first quarter of 2016. Other key takeaways regarding economic performance included:

• An overall positive view of the economy: 1 in 2 mid-size businesses feeling the economy is healthy and well-positioned for growth; only 12 percent report a negative outlook.
• It’s more than a feeling: 63 percent of these companies hit benchmarks for growth and performance over the past 12 months, and another third stated they were close to meeting these goals.

This online survey was conducted in the U.S. by OnePoll on behalf of Bibby Financial Services between June 24, 2016 and June 28, 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 tracks top business concerns, challenges and approaches to business funding.