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Small Businesses: Difference between revisions
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* Record high share of small business owners '''(71%) expect their revenue to increase in the next year.''' | * Record high share of small business owners '''(71%) expect their revenue to increase in the next year.''' | ||
* A record-high share also anticipates hiring more staff in the next year (47% up from 37% last quarter). | * A record-high share also anticipates hiring more staff in the next year (47% up from 37% last quarter). | ||
* '''73% of small businesses say it’s harder to borrow money for their business from banks because they are tightening lines of credit.''' Likewise, 74% express concern about rising interest rates making it harder to pay back current business loans. | === More than three-quarters '''(76%) say that rising interest rates are limiting their ability to raise capital''', up from 66% who said the same last quarter. Of the 26% that had used a variable rate loan, 53% have converted it into a fixed rate loan. === | ||
* '''A majority (54%) of small businesses rate inflation as their largest challenge.''' This matches past highs from the Index and has remained consistent since Q3 2022. Consistent with last quarter, supply chain issues (23%), rising interest rates (23%), and revenue (20%) remain second-tier concerns behind inflation. | *'''73% of small businesses say it’s harder to borrow money for their business from banks because they are tightening lines of credit.''' Likewise, 74% express concern about rising interest rates making it harder to pay back current business loans. | ||
*'''A majority (54%) of small businesses rate inflation as their largest challenge.''' This matches past highs from the Index and has remained consistent since Q3 2022. Consistent with last quarter, supply chain issues (23%), rising interest rates (23%), and revenue (20%) remain second-tier concerns behind inflation. | |||
== Small Business Credit Survey == | == Small Business Credit Survey == | ||
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== Other Surveys == | == Other Surveys == | ||
=== American Express Small Business Financial Confidence Report May 2023 === | === American Express Small Business Financial Confidence Report === | ||
==== May 2023 ==== | |||
''Online survey was conducted between March 20 – 30, 2023, surveying 550 small business leaders, including 250 at the smallest small business (<10 employees), 200 at a medium small business (11-100 employees), and 100 at the largest small business (101-500 employees).'' | ''Online survey was conducted between March 20 – 30, 2023, surveying 550 small business leaders, including 250 at the smallest small business (<10 employees), 200 at a medium small business (11-100 employees), and 100 at the largest small business (101-500 employees).'' | ||
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=== Goldman Sachs Research === | |||
Small businesses rely disproportionately on small banks for borrowing, receiving almost 70% of their commercial and industrial loans from banks with less than $250 billion in assets and 30% from banks with less than $10 billion in assets (versus 45% and 10% for larger businesses, respectively.<ref>https://www.goldmansachs.com/intelligence/pages/smaller-businesses-and-towns-are-likely-to-be-hit-hardest-by-bank-turmoil.html</ref> | |||
* At least 70% of small business lending is done by smaller banks in 95% of counties, which account for more than 80% of GDP. | |||
* Bank stress is likely to reduce lending growth by 2-6 percentage points, according to estimates from Goldman Sachs Research. “Because small banks are likely to tighten credit more aggressively and small businesses disproportionately borrow from them, the hit to lending to small businesses will likely be larger" | |||
* In places where they don’t operate, bigger institutions may be more reluctant to lend to small businesses that aren’t already customers because it’s harder to assess the riskiness of loans to individual small businesses. Part of the reason that small banks disproportionately lend to small businesses in the first place is because their closer geographic proximity to individual small businesses gives them an informational advantage in gauging the creditworthiness of those borrowers. | |||
* In many counties across the U.S., there’s no nearby alternative to smaller banks. There isn’t a globally systemically important bank (GSIB) branch in roughly two thirds of counties, making up 10% of U.S. GDP, according to Goldman Sachs Research. | |||
== Past Recessions == | == Past Recessions == | ||