Capital One Bank Quarterly Small Business Barometer Survey Finds Small Business Confidence Holds Steady through Three Quarters

  Capital One Bank Quarterly Small Business Barometer Survey Finds Small
  Business Confidence Holds Steady through Three Quarters

           Nationally, fewer small businesses report plans to hire

Business Wire

MCLEAN, Va. -- December 04, 2012

According to Capital One’s third quarter 2012 Small Business Barometer, small
business owners across the country believe economic conditions have held
steady throughout 2012, and looking ahead to 2013, many (45 percent) think the
U.S. economy will remain about the same. Capital One’s quarterly survey of
small businesses across the nation examines general economic indicators and
small business perceptions of the economic environment, gauging current
financial conditions and business projections for the next six months. Of
those businesses that expect to see change, optimism outweighs pessimism by
five points, with 29 percent expecting to see economic conditions improve,
compared to 24 percent who expect conditions to worsen over the next six
months. The survey suggests, however, a growing level of caution about the
economy as only 27 percent of the businesses surveyed reported plans to hire
in the next six months, a drop of 10 points in a single quarter.

“Our survey results for the third quarter indicate that while economic
conditions remain stable, and most small business owners report financials are
holding steady, some concerns and uncertainty remain – and may even be
elevating,” said Jon Witter, President of Direct, Consumer and Small Business
Banking at Capital One. “A strong close to the year could shift the dynamic
and bring businesses into 2013 with more momentum, but we do anticipate some
regional challenges in the Northeast as many businesses assess damage from
Hurricane Sandy and work to rebuild. End of the year budgeting and planning is
going to be as important this year as it ever has been.”

Financial Performance and Spending

Current economic conditions for small businesses nationally are holding
steady. Nearly half (45 percent) of small businesses report economic
conditions for their business are about the same, consistent with the previous
quarter and the same as the third quarter of 2011. However, roughly a third
(29 percent) of small businesses report improving economic conditions. This is
eight points lower than last quarter and four points lower than the third
quarter of 2011. While a majority of small businesses believe economic
conditions are the same or improving, a quarter of small businesses (24
percent) believe economic conditions are getting worse.

Although 40 percent of small businesses report their firm’s financial position
has improved compared to a year ago, the number who report their business is
doing worse reached a two-year high (23 percent). This is an eight point
increase from the previous quarter and the third quarter of 2011. Thirty-five
percent of small businesses report their firms’ financial positions are about
the same, a six point decrease from last quarter and a 14 point decrease from
the third quarter of 2011.

Economic Outlook and Business Pressures

Small business owners’ economic outlook for the next six months has worsened
compared to a year ago. The national business outlook is a measure of business
prospects over the next six months on a scale of significantly worse (1) to
significantly better (10). Even though they are faced with steady current
economic conditions, due to worsening financial performance, small businesses
rate the national business outlook at 5.7 out of 10 points, 0.3 points lower
than the 6.0 from the previous quarter. Conversely, all of the key business
indicators are having a greater impact on business prospects than last
quarter. Price margins are expected to have the most impact on business
prospects, also having the largest change since last quarter (0.3-point
decrease).

Hiring & Spending Outlook

Across the country, fewer small businesses are planning to hire employees in
the next six months. The majority of small businesses say they do not plan to
hire employees in the next six months (69 percent). This is four points higher
than the same time last year (Q3 2011) and nine points higher than last
quarter (Q2 2012). Businesses reporting challenges in finding the right talent
to fill available openings has decreased slightly from Q2. Fourteen percent of
small businesses say they have job openings they are unable to fill, down two
points from the previous quarter.

The majority of small businesses report that plans for general spending,
business development and investment are steady. Sixty-five percent of small
businesses plan to keep spending at the same levels, a six point increase from
the third quarter of 2011, but a five point decrease from last quarter’s
two-year high of 69 percent. This shift parallels the decrease in the number
of small businesses that plan to increase spending. Only 14 percent of small
businesses forecast increasing business development and investment spending,
11 points lower than the third quarter of 2011, but only one point lower from
the previous quarter of 2012.

Availability of Financing

In the third-quarter survey, 21 percent of U.S. small businesses reported they
have tried to obtain financing in the last 12 months. This figure, the third
highest it has been in the past two years, is four points lower than the
previous quarter and two points higher than one year ago (Q3 2011). More than
two-fifths (45 percent) of small businesses report that obtaining financing is
harder than it was six months ago, an increase of three points from the
previous quarter. Eleven percent of small businesses report that obtaining
financing is easier than it was six months ago, an increase of two points from
the previous quarter.

Survey Methodology

The findings reported in this release are froma telephone survey conducted by
the opinion research firm, Braun Research of Princeton NJ. The survey was
sponsored byAPCO Worldwide of Washington DC. Braun Research completed1,901
interviews withowners or managers of USfor-profitsmall businesses, defined
as those under $10 million in annual revenue(1,901 interviews, 300 in New
York, 300 in New Jersey,300 in Louisiana,300 in Washington, D.C. and 300 in
Texas and a national component of 401). All interviews were conducted
bytelephone at their places of business. One respondent per business was
conducted. The interviews were conducted September 21^st – October 5^th, 2012.
The margin of error foreach state's studyis ±4.37 percentage pointsat the
95% confidence level. Interviews were monitored at random.

Sampling for this study was conducted using a national sample of businesses
drawn from InfoUSA. All interviews were conducted using a computer assisted
telephone interviewing system. Statistical weights were designed from the
United States Department of Commerce to ensure proper inclusion of all SIC
codes.

About Capital One

Capital One Financial Corporation (www.capitalone.com) is a financial holding
company whose subsidiaries, which include Capital One, N.A., and Capital One
Bank (USA), N. A., had $213.3 billion in deposits and $302.0 billion in total
assets outstanding as of September 30, 2012. Headquartered in McLean,
Virginia, Capital One offers a broad spectrum of financial products and
services to consumers, small businesses and commercial clients through a
variety of channels. Capital One, N.A. has approximately 1,000 branch
locations primarily in New York, New Jersey, Texas, Louisiana, Maryland,
Virginia and the District of Columbia. ING DIRECT, a division of Capital One,
N.A., offers direct banking products and services to customers nationwide. A
Fortune 500 company, Capital One trades on the New York Stock Exchange under
the symbol "COF" and is included in the S&P 100 index.

Contact:

Capital One Financial Corporation
Steve Schooff, 212-216-8984
Steve.Schooff@capitalone.com
 
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