US President Joe Biden speaks during a Rose Garden event at the White House marking National Small Business Week on May 1, 2023 in Washington, DC.
Alex Wong | Getty Images
Small business owners are more optimistic to start the year, even as they face persistent inflation and lending concerns, a new poll released Thursday found.
Seventy-five percent of small business owners are optimistic about their financial path in 2024, up from 68% the previous year, according to a survey by Goldman Sachs 10,000 Small Business Voices, a policy advocate for small business owners.
Meanwhile, 28% of respondents rated the economy as good or excellent, up 9% from the previous quarter.
More than half of the small business owners surveyed said they expect to create jobs this year, and 62% said they expect profits to increase.
The survey adds to A recent series of data It shows that consumers and businesses are starting to feel more confident About the economy After a period when inflation was stubborn and borrowing became more difficult.
“The fact that 75% of small business owners are optimistic is a remarkably high number, considering that inflation is still plaguing them, they are still facing challenges of access to capital and workforce issues…all of these challenges have been very thorny for “The last few years haven’t seen any real progress,” Joe Wall, managing director of government affairs at Goldman Sachs, told CNBC.
The survey was conducted nationally in mid-January and included more than 1,400 small business owners.
“Growth opportunities” despite challenges
Jill Bommarito, CEO of Detroit-based Ethel’s Baking Company, said she has seen strong consumer spending and noted that supply chain issues and inflation are easing. The wholesale baking company, which launched in 2011 and now has 26 employees, specializes in candy bars and sells to Whole Foods, Target and Costco.
“There are opportunities for growth,” Bommarito said. “This does not mean we are not facing headwinds… There is no doubt about that. However, the demand for real and authentic brands and services is there, more than ever.” Graduate of the Goldman Sachs 10,000 Small Businesses program, which provides business education and support services.
The survey also asked participants to rank how difficult the past four years had been. Interestingly, small business owners have found that 2023 will be almost as difficult as 2020 – the height of the pandemic and a time when many businesses were unable to operate. 35% of participants said that 2020 was the most challenging year for them, while 33% chose 2023.
“I don’t think most people appreciate the fact that last year, for a third of small businesses, would say it was the hardest year they’ve ever had,” Wall said, citing inflation and supply chain issues that business owners have faced. .
Inflation remains a major concern for business owners, even as the rate of price increases decreases. 71% of those surveyed reported that inflationary pressures had increased during the past three months.
Rising prices jumped to the top of the list of small business concerns in the National Federation of Independent Business’s monthly sentiment reading in December, overtaking labor woes and regulation.
Wall said some of the economic optimism in Goldman’s data may be due to expected interest rate cuts from the Federal Reserve next year. Wednesday, The Fed left interest rates unchanged He indicated that he would not start lowering interest rates yet.
Main Street also focuses on the lending environment Amid rising interest rates. About three-quarters, or 77%, of respondents to the Goldman survey said they were concerned about their ability to access capital.
The survey also asked about Basel III’s endgame plans, which will increase capital retention requirements for major and regional banks. The survey found that 86% of respondents said their growth expectations would be affected if access to capital continued to be difficult.
Goldman Sachs has come out against the Basel III endgame proposal.
In addition, about a third of owners surveyed said they thought they could get a loan. Of the 35% of those surveyed who applied for a loan in the past year, nearly 80% found it difficult to access soft capital. 40% of them received all the funding they requested.
Additionally, 28% of respondents who applied for loans said they had obtained a loan or line of credit with repayment terms that they found to be exploitative.
The latest NFIB survey also found that business owners are paying higher interest rates, with the average rate paid on short-term loans reaching 9.8% in December, up from 7.6% in January 2023.
Bommarito said access to working capital is her top issue for 2024.
“We are the foundation of this economy,” she said of small businesses like hers. “In general, we consider it just the riskier bet.”
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