According to a report given by PPCMP (Pepperdine Private Capital Markets Project), though entrepreneurs are interested in growing their business, many of them have fewer financial resources to do so. Nearly 95% of the private businesses reported that they are enthusiastic to put their growth strategies in action. Of them, only 53% cited that they have the required financial resources to execute their expansion plans.
About 54% of the businesses were unsuccessful in their attempt to raise capital in the last six months and of the businesses that were successful, 59% of them secured capital through bank loans, followed by 20% who got financing from friends and family. Only 13% of private businesses participated in the survey, reported securing funding from Angel Investors, Venture Capitalists and Private Equity combined.
The report said that the supply in the form of loans and other financing methods is not meeting the demand of raising capital by the businesses. By facilitating easy accessibility to various sources of capital, especially bank loans, will help businesses to hire more employees and expand their operations, both of which will help in boosting the economy.
From the last six months, about 60% of loan applications were denied by banks. Only one business plan was funded by Angel Investors of the 25 reviewed. Venture capitalists had reviewed 80 business plans and has funded only one business plan. Private equity funds invested in only one business plan after reviewing 150 plans.