Union Bank’s Small Business Economic Survey Finds Entrepreneurs Optimistic

  Union Bank’s Small Business Economic Survey Finds Entrepreneurs Optimistic

  More women-, minority- and veteran-owned businesses plan to bolster staff,
                           capital spending in 2014

Business Wire

SAN FRANCISCO -- February 27, 2014

Union Bank, N.A., today announced the results of its annual Small Business
Economic Survey, showing that while more small business owners incurred
layoffs in 2013, a growing number report increased sales and optimism about
the overall economy, with slightly fewer owners planning to trim staff in
2014.

The survey found that an increasing number of respondents believe the small
business climate will continue to improve in the next two years. The improving
outlook reflects survey data that show significant increases in the number of
entrepreneurs working longer hours due to increased business in 2013 and in
the number of owners planning to add full-time staff this year.

Despite a four percentage point rise in layoffs, most respondents plan to
maintain the same staffing and capital expenditures, with more businesses (26
percent, up 3 points) planning to boost capital spending and fewer companies
(6 percent, down 2 points) anticipating layoffs in 2014.

“These results reflect the optimism we’ve seen among small business owners as
they continue to generate new business and expand, but with an eye toward
restraint given past economic challenges,” said Union Bank Executive Vice
President Todd Hollander, head of Business Banking. “At this juncture,
stability is key as most entrepreneurs inch forward in terms of capital
spending – business owners are ready to invest in their businesses, and we
remain ready to help with products and services tailored for them.”

Economic Outlook

Overall, respondents report a steady increase in optimism about the direction
of the national economy and their state’s economy. While the majority of
entrepreneurs (59 percent) still believe the national economy is headed in the
wrong direction, there was a significant increase in those who believe the
national economy is headed in the right direction (41 percent), up 10
percentage points from last year and up 16 percentage points from 2012. In
terms of the economic outlook in the state where their business is located,
while 51 percent believe it is headed in the wrong direction, 49 percent
believe their state is headed in the right direction, up eight percentage
points from last year and up 15 percentage points from 2012.

Among the industries surveyed, those from the professional services industry
(physicians, certified public accountants, attorneys, etc.) remain the most
optimistic with 51 percent believing in the direction of the national economy,
up 14 percentage points, and 62 percent believing in the direction of their
state economy, up 13 percentage points.

Respondents from the personal services industry (auto repair, salons, dry
cleaning, etc.) were the most pessimistic about the direction of their state
economy with 63 percent believing it’s headed in the wrong direction. They
also ranked among the most pessimistic about the direction of the national
economy with 72 percent believing it’s headed in the wrong direction, second
only to retail store owners at 73 percent.

Labor and Capital Spending

Following a year of increased sales for more than a third of businesses, most
entrepreneurs maintained stable costs. Overall, there was no change in the
number of respondents planning to add staff (15 percent).

Of those planning to increase staff, 69 percent plan to hire full-time staff,
up 14 percent from last year, and 31 percent plan to hire part-time staff,
down five percent from last year. The rise in the number of respondents
planning to hire full-time staff coincides with another part of the survey
that which found that more respondents than last year (55 percent, up 11
points) worked longer hours in 2013 due to increased business.

“Small business owners are working harder than ever,” says Hollander. “We
recognize how critical it is to support entrepreneurs and their companies as
part of rebuilding this country’s economy.”

Among the industries surveyed, the majority plan stable staffing, with retail
stores anticipating more staffing additions (17 percent) and cuts (10 percent)
in the coming year than all other industries surveyed. The personal services
industry was the only industry not planning employee cutbacks.

Businesses in the construction or engineering fields (39 percent) incurred
significantly more employee cutbacks than respondents in all other industries
surveyed and continue a slight upward trend in layoffs with a two percentage
point climb from last year and a four percentage point increase from 2012.
Retail stores report the fewest layoffs (19 percent), followed closely by the
professional services industry (20 percent).

For capital spending, those from the construction or engineering fields
indicate the most pessimistic outlook with 22 percent planning cutbacks, up
five percentage points from last year.

Diverse Businesses Outlook

While nearly a third of women-, minority- and veteran-owned businesses
incurred layoffs in 2013 and one in five plan an out-of-state move in 2014,
more women-, minority- and veteran-owned businesses report optimism about the
overall economy, the direction of their business and plans for increased
hiring and capital spending in 2014 than non-certified businesses.

More women-, minority- and veteran-owned businesses (29 percent, up 11 points)
plan to bolster staff this year than the previous year. Nine percent of
non-certified businesses plan to add staff in 2014, down five percentage
points from last year. For capital spending, 37 percent of women-, minority-
and veteran-owned businesses plan to increase capital expenditures, up 11
percentage points from last year, while 20 percent of non-certified businesses
plan to increase capital spending, down two percentage points from last year.
More respondents from women-, minority- and veteran-owned businesses (43
percent) report increased sales in 2013 than the previous year (32 percent).
Thirty-four percent of non-certified businesses report increased sales in
2013, down three percentage points.

Significantly more women-, minority- and veteran-owned businesses (28 percent)
report benefiting from the Small Business Jobs Act than non-certified
businesses (13 percent) and were more likely to apply for a loan or access to
credit in 2013 than those from non-certified businesses. Twenty-eight percent
of women-, minority- and veteran-owned businesses applied for a loan or access
to credit in 2013, up 16 percentage points from the previous year, while 14
percent of non-certified businesses applied for a loan or access to credit in
2013, down two percentage points from the previous year.

“These findings reflect the interest we are seeing among more multicultural
businesses to apply for loans, and this is a good indication that diverse
business owners are optimistic about the future,” said Union Bank Senior Vice
President and Public Affairs Manager Frank Robinson, who manages several of
the bank’s community outreach and multicultural programs. “Our Business
Banking and Government Lending teams provide personalized service and a
variety of lending options – this is key to helping customers feel more
confident about the lending process, as noted by multicultural business and
organization leaders during a recent Union Bank roundtable.”

The survey reflects that certified businesses indicate having applied for a
loan/access to credit significantly more than non-certified businesses, and
access to credit also remains important for small business owners in general.
Overall, 19 percent of respondents applied for a loan or access to credit in
2013, a five percentage point increase from the previous year, and respondents
report easier access to credit in 2013 than the previous year. Of those who
applied for a loan, significantly more were approved (78 percent) than the
previous year (62 percent).

About UnionBanCal Corporation & Union Bank, N.A.

Headquartered in San Francisco, UnionBanCal Corporation is a financial holding
company with assets of $105.9 billion at December 31, 2013. Its primary
subsidiary, Union Bank, N.A., provides an array of financial services to
individuals, small businesses, middle-market companies, and major
corporations. The bank operated 420 branches in California, Washington,
Oregon, Texas, Illinois, New York and Georgia, as well as 2 international
offices, on December 31, 2013. UnionBanCal Corporation is a wholly-owned
subsidiary of The Bank of Tokyo-Mitsubishi UFJ, Ltd., which is a subsidiary of
Mitsubishi UFJ Financial Group, Inc. Union Bank is a proud member of the
Mitsubishi UFJ Financial Group (MUFG) (NYSE:MTU), one of the world’s largest
financial organizations. In July 2013, American Banker Magazine and the
Reputation Institute ranked Union Bank #1 for reputation among its customers.
Visit www.unionbank.com for more information.

About the Survey

Union Bank, working with its survey provider, surveyed 500 respondents (400 in
California and 100 in the Pacific Northwest) online in January 2014. The small
businesses must have been in operation for a minimum of two years and were
defined for the survey as having $15 million or less in annual sales. Based on
the sample size, the survey results reflect a +/- (4) point margin of error
(95) percent of the time; California results reflect a +/- (5) point margin of
error (95) percent of the time. Pacific Northwest results reflect a +/- (10)
point margin of error (95) percent of the time.

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Contact:

Union Bank, N.A.
Tanya Peebles-Hill, 213-236-5329
Tanya.PeeblesHill@unionbank.com
or
Jane Yedinak, 415-765-3241
Jane.Yedinak@unionbank.com
 
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