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DEBT FINANCING

Why Businesses are Borrowing Less

Businesses are borrowing less. This chart shows why
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A lot of people use the "credit crunch" to explain everything that's wrong with the economy. But tighter lending standards are just one reason companies are borrowing less from banks, according to a recent survey of small companies conducted by the AICPA. The survey of 2,000 private businesses with revenues of less than $25 million showed that about 40% of the companies had not borrowed from banks in the 12 months prior to the survey. Below, their explanations:sourcesstandards

    South- Mid- South- North-
  West west west east east
Rates too high 10.8% 14.3% 3.0% 5.0% 7.7%
Have other capital 16.2 7.1 6.1 25.0 19.2
Tighter bank 5.4 14.3 21.2 15.0 26.9
Don't borrow 29.7 28.6 21.2 35.0 11.5
Don't need capital 51.4 28.6 51.5 20.0 34.6

Source: American Institute of Certified Public Accountants, New York City, 1991.




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