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Small Businesses: Difference between revisions
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Bankruptcies are starting to increase at a faster pace this year (from a very low level, and I dont expect to see 2008 levels, but we could see a similar rate of increase), and current funding conditions don't signal yet the best environment for unprofitable businesses to thrive, which unfortunately is more than 50% of small businesses. | Bankruptcies are starting to increase at a faster pace this year (from a very low level, and I dont expect to see 2008 levels, but we could see a similar rate of increase), and current funding conditions don't signal yet the best environment for unprofitable businesses to thrive, which unfortunately is more than 50% of small businesses. | ||
But there are still a lot of questions about the debt structure of small businesses, their creditworthiness, and their dependence on it, and data about it seems to be limited or nonexistent. This in my opinion is key to having a better understanding about the hit the small business could take in a sudden credit contraction and even the impact of higher rates for longer. Due to other cycles, I have the intuition the hit from credit contraction could be more indirect, as demand falls throughout the economy. | But there are still a lot of questions about the debt structure of small businesses, their creditworthiness, and their dependence on it, and data about it seems to be limited or nonexistent. This in my opinion is key to having a better understanding about the hit the small business could take in a sudden credit contraction and even the impact of higher rates for longer. Due to other cycles, I have the intuition the bigger hit from credit contraction could be more indirect, as demand falls throughout the economy. | ||
Taking all into account, I find it difficult to find the growth factors that could support a small businesses recovery in the near future, other than a broad economic recovery or liquidity coming to the economy, these are the potential headwinds I currently see: | Taking all into account, I find it difficult to find the growth factors that could support a small businesses recovery in the near future, other than a broad economic recovery or liquidity coming to the economy, these are the potential headwinds I currently see: | ||