While businesses continue to report steady increases in access to credit and an increase in demand for credit, small businesses are still looking to secure working capital, according to the Third Quarter 2016 Private Capital Access (PCA) Index report by Dun & Bradstreet and Pepperdine Graziadio School of Business and Management.
AR woes: Both small (less than $5 million in revenue) and midsized ($5 million to $100 million in revenue) businesses combined reported a 7.8% increase in access to capital and a 3.1% increase in demand for capital year-over-year. However, about 2% more businesses than a year ago reported that they are seeking financing for working capital fluctuations. Small businesses reported that a slowing of accounts receivable is aggravating the situation.
This report is part of Pepperdine’s Private Capital Markets Project, which conducts ongoing research to understand the true cost of private capital across market types and the investment expectations of privately held business owners. Some valuation experts are not comfortable with the standard practice of converting measurable public-market data into proxies for private-company valuation. They feel that a private-company cost of capital method should emerge to eliminate the need to adjust for different risks and returns, liquidity, access to capital, pricing mechanisms, holding periods, and transaction costs.
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