US President Joe Biden speaks at a Rose Garden event held at the White House to commemorate National Small Business Week on May 1, 2023 in Washington, DC.
Alex Wong | Getty Images
A new poll released Thursday finds small business owners are more optimistic about the start of the year, even as they face persistent inflation and lending concerns.
According to a survey by Goldman Sachs 10,000 Small Business Voices, a policy advocacy group for small business owners, 75% of small business owners are optimistic about their financial trajectory in 2024, up from 68% a year ago. .
Meanwhile, 28% of respondents rated the economy as “good” or “excellent,” an increase of 9% from a quarter ago.
More than half of small business owners surveyed said they expected jobs to be created this year, and 62% said they expected profits to increase.
The survey adds to a recent body of data showing that consumers and businesses are starting to gain confidence in the economy after a period of stubborn inflation and tough borrowing.
“The fact that 75% of small business owners are optimistic is very significant considering that inflation continues to plague them and they continue to face access to capital and workforce-related issues. “That’s a high number…all of these challenges are very troubling for us. We haven’t made any real progress in recent years,” said Joe Goldman, managing director of government affairs at Goldman Sachs. Wall told CNBC.
The survey was conducted in mid-January among the owners of more than 1,400 small and medium-sized enterprises nationwide.
“Opportunity for growth” despite challenges
Jill Bomarito, CEO of Detroit-based Ethel’s Baking Company, said consumer spending is strong, noting supply chain issues and inflation are easing. Founded in 2011, the wholesale baking company currently has 26 employees and specializes in dessert bars, which are sold at Whole Foods, Target and Costco.
“Growth opportunities exist. That doesn’t mean we don’t face headwinds… there’s no question about it. But the demand for real, authentic brands and services is there. and the demand is higher than ever,” Bomarito said. Alumni of the Goldman Sachs 10,000 Small Businesses program, which provides business education and support services.
The survey also asked respondents to rank the difficulty level over the past four years. Interestingly, small business owners found 2023 to be almost as difficult as 2020. This was the peak of the pandemic and a time when many businesses were unable to operate. 35% of respondents said 2020 was the most difficult year, while 33% said 2023.
“I don’t think most people understand the fact that for a third of small businesses, last year was the toughest year ever,” Wall said, adding that business owners are facing a growing number of inflation and supply shortages. You cited the chain issue. .
Although price increases have slowed, inflation remains a major concern for business owners. 71% of those surveyed reported that inflation pressures had increased in the past three months.
Rising prices rose to the top of small businesses’ list of concerns, ahead of labor issues and regulations, in a monthly sentiment survey released by the National Federation of Independent Businesses in December.
Mr. Wall said some of the economic optimism in Goldman’s numbers may be due to expectations that the Federal Reserve will cut interest rates next year. The Fed kept interest rates on hold Wednesday, indicating it would not begin cutting rates yet.
Main Street is also focusing on the lending environment amid high interest rates. Nearly three-quarters, or 77%, of respondents to the Goldman survey said they were concerned about their ability to access capital.
The poll also asked about late-stage Basel III plans to raise capital requirements for large and regional banks. According to the survey, 86% of respondents said their growth forecasts would be hit if access to capital continues to be difficult.
Goldman Sachs has expressed opposition to the Basel III endgame proposal.
Additionally, only about one-third of owners surveyed said they thought they could afford a loan. Of the 35% of people surveyed who applied for a loan last year, nearly 80% found it difficult to access affordable finance. And 40% received the full amount of funds they requested.
Additionally, 28% of respondents who applied for a loan said they had taken out a loan or line of credit with payment terms that they considered to be predatory.
NFIB’s recent poll also found that business owners are paying higher interest rates, with the average interest rate paid on short-term loans reaching 9.8% in December 2023, up from 7.6% in January 2023.
Bommarito said access to working capital is the biggest challenge in 2024.
“We are the foundation of this economy,” she said of small businesses like hers. “We are generally considered a riskier bet.”
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