Lower commercial real estate values are one of the few bright spots for U.S. small-business owners; despite this, only 6% of owners have purchased at least one property in past two years: CIT/Harris Interactive survey
November 1, 2010
– Lower commercial real estate values continue to offer one of the few upsides for small business owners as the U.S. recovers from the Great Recession. Despite this condition, only 6% have purchased one or more properties over the past two years, while a majority (52%) hasn't even thought about making an acquisition. In fact, a little over a quarter (28%) believe that buying real estate today presents a "great" or "substantial" opportunity.
These are a few of the findings, released today, in the "CIT Small Business Commercial Real Estate Study," which surveyed more than 300 small business owners around the United States. The study was developed by CIT Group Inc. /quotes/comstock/13*!cit/quotes/nls/cit (CIT 43.33, -0.02, -0.05%) , a leading provider of financing to small businesses and middle market companies, and the data collection was conducted online by Harris Interactive Service Bureau, a leading global market research firm.
"The depressed commercial real estate market and historically low interest rates continue to present an opportunity for small business owners looking to grow their businesses," said Chris Reilly, President of CIT Small Business Lending. "Today's market conditions may offer a once-in-a-lifetime opportunity for entrepreneurs who want to take their businesses to the next level. To achieve this, Small Business Administration loans, with their low cost and flexible terms, offer an excellent choice for small business owners looking to refinance their existing real estate or to acquire a new property."
Key findings from the study:
Economic and financial anxiety remains. Thirty-six percent of small business owners said that the biggest barrier they faced in securing a loan to buy commercial real estate was current market/economic conditions. Financial constraints also remain a significant hurdle, with nearly one in five small business owners (19%) indicating that they could not afford a down payment to secure a traditional bank loan to acquire commercial real estate. Refinancing not top-of-mind. Despite interest rates at historic lows, only 13% of small business owners who owned their property were "very likely" or "somewhat likely" to consider refinancing, while nearly a quarter (24%) were "not very likely" or "not likely at all" to consider refinancing. SBA loans offer options. Just under a quarter (23%) of small business owners indicated that SBA loans were a good overall choice with no significant downside and one-fifth said they were designed to help business owners with less than perfect credit. Small business owners indicated that SBA loans allowed borrowers to make a lower down payment (14%), have a lower monthly payment (12%), and pay off the loan over a longer time period (15%). Few familiar with recent small business legislation. Just over half (52%) of small business owners indicated that they did not know what the Small Business Jobs and Credit Act was or how it might impact them as small business owners. The legislation sweetens SBA loan terms for both lenders and borrowers, eliminating borrowers' fees, raising the loan guarantee to 90% from 75%, and increasing loan limits. (note:This study was conducted between September 9 and 13)(note:2010)(note:before the bill passed Congress and the President signed it into law.)
Since its inception in 1992, CIT Small Business Lending has partnered with thousands of entrepreneurs by lending billions of dollars necessary to grow their businesses. CIT Small Business Lending remains a leading Small Business Administration lender to women-, minority-, and veteran-owned small businesses and is a leader in commercial real estate purchases and new construction financing for owner-occupied properties.
U.S. small businesses have a significant impact on the American economy. They employ nearly 59 million Americans -- approximately half of all private-sector jobs. Small businesses constitute approximately 97% of all identified exporters and produce approximately 29% of the known export value. Further, small businesses collectively account for more than half of the United States' non-farm private gross domestic product.
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About the Study
The CIT Small Business Commercial Real Estate Study was conducted online in September 2010. Respondents included 306 non-home-based small business owners/decision makers from across the United States. Data for this survey were collected by Harris Interactive Service Bureau ("HISB") on behalf of CIT Small Business Lending. HISB was responsible for the data collected and CIT Small Business Lending was responsible for the survey design, data weighting, data analysis, and reporting.
About CIT Small Business Lending
CIT Small Business Lending is one of the nation's leading SBA 7(a) volume lenders. Designated as a "Preferred Lender" by the SBA because of its strong historical record, it primarily offers loans to finance owner-occupied real estate purchases, franchises, medical and professional practice start-ups, and business acquisitions. www.cit.com
About Harris Interactive
Harris Interactive is one of the world's leading custom market research firms, leveraging research, technology, and business acumen to transform relevant insight into actionable foresight. Known widely for the Harris Poll and for pioneering innovative research methodologies, Harris offers expertise in a wide range of industries including healthcare, technology, public affairs, energy, telecommunications, financial services, insurance, media, retail, restaurant, and consumer package goods. Serving clients in over 215 countries and territories through our North American, European, and Asian offices and a network of independent market research firms, Harris specializes in delivering research solutions that help us -- and our clients -- stay ahead of what's next. For more information, please visit www.harrisinteractive.com.
Founded in 1908, CIT /quotes/comstock/13*!cit/quotes/nls/cit (CIT 43.33, -0.02, -0.05%) is a bank holding company with more than $40 billion in finance and leasing assets. It provides financing and leasing capital to its more than one million small business and middle market clients and their customers across more than 30 industries. CIT maintains leadership positions in small business and middle market lending, factoring, retail finance, aerospace, equipment and rail leasing, and global vendor finance. www.cit.com
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