Nevada has the highest percentage in the nation of small and midsized businesses struggling to gain financing, a new study shows.
This week, Pepperdine University in Los Angeles and Dun & Bradstreet Credibility Corp. issued survey results showing 75 percent of the 76 Nevada businesses surveyed are facing limited growth opportunities due to the ''difficult financing environment.''
That compares to 61 percent of businesses facing such struggles nationwide. In all, 5,997 U.S. businesses were surveyed.
Among small businesses — those with annual revenue of $5 million or less — 64 percent nationwide described the current financing environment as restrictive. That compares to 47 percent of larger businesses — up to $100 million in annual revenue — indicating that’s the case.
Among national results for the smaller businesses, 55 percent said the difficult financing environment was restricting plans to grow their workforces.
As for Nevada, the state had the highest percentage of business owners, 56 percent, who transferred personal assets to their businesses during the past six months. That compares to 42 percent nationwide.
Asked about the survey, Nevada bankers said the results didn’t reflect a change in bank lending standards. Rather, bankers said, they reflected a difficult economic environment in which:
• Nevada leads the nation in unemployment, leaving consumers with less money to spend at local businesses.
• Nevada leads the nation in foreclosures, meaning no one is buying goods and services to maintain and improve many homes.
• With most Nevada homeowners underwater in their mortgages, 67 percent, most would-be entrepreneurs can’t tap home equity lines of credit to finance their businesses.
• Local commercial real estate values have tanked, meaning would-be business borrowers lack collateral that used to back loans.
• Nevada courts are clogged with business bankruptcies and banks suing defaulting business borrowers. Many of these businesses are having trouble refinancing existing debt and would likely struggle to qualify for expansion financing.
Now, business lending is largely based on cash flow produced by businesses and less on collateral values, said Bill Uffelman, CEO of the Nevada Bankers Association.
''The bank has to lend based on the likelihood they’re going to be able to pay back the loan,'' he said.
Lending guaranteed by the U.S. Small Business Administration has been strong recently, he said.
''The guarantee makes up for the lack of collateral,'' he said.
Nevada banks, in the meantime, are intensely competing for a small pool of qualified business borrowers, he said.
For that reason, he said, small businesses looking for financing should shop around, because one bank might offer better terms than another.
One of the bankers looking for qualified borrowers is Mario Joyner, vice president and small business sales manager for Nevada State Bank.
''We have hundreds of millions of dollars we’d love to lend out,'' Joyner said.
In part due to the weak U.S. economy, he said, interest rates were favorable for businesses that can qualify for financing.
They run 4 percent to 4.5 percent to finance real estate and other hard assets, about 2 percentage points lower than during the boom years, he said.
Joyner agreed SBA financing was becoming more popular. In part because of that, total business lending by the bank so far this year is about $40 million, up from $38 million during the same period last year, he said.
One option for borrowers to look at is the nonprofit Nevada State Development Corp., which says it is the largest provider in Nevada of SBA 504 loans. These loans, providing up to 90 percent financing, are geared toward real estate and long-lasting equipment.
NSDC said it had 57 such loans approved last year for $30.7 million — and that business picked up this year.