Expectations for Small Business Growth in 2018 on the Rise as Confidence in the U.S. Economy Steadies
Small Businesses Report Greater Access to Bank Loans and Increased Hiring
Since PCA began in 2012, expectations for overall business performance improvement in the upcoming year are at a record high. Eighty-four percent of both small and mid-sized businesses (
Fewer small and mid-sized businesses, a major source of employment and economic activity for the
Small businesses reported higher success rates in accessing financing from bank loans (37 percent in Q4 2017, up from 29 percent in Q4 2016) and business credit cards (65 percent in Q4 2017, up from 51 percent in Q4 2016). Small businesses report the main purpose for raising capital in the fourth quarter was to refinance existing loans (11 percent). This is a 14 percent increase compared to 2016 and signals that small businesses may have been taking precautionary actions with respect to another pending Federal interest rate increase before end of year as was predicted during the time the survey was in the field.
While 69 percent of small businesses (up from 59 percent in 2016) are reporting they plan on hiring employees within the next six months, the high demand needed for financing to support planned growth or expansion in the next six months has declined 9.8 percent compared to one year ago. The seemingly incongruous numbers point to a more complex story for growth going into the new year.
"Given the current state of the
Five percent of small and mid-sized businesses reported that government regulations and taxes are preventing them from hiring in the next six months, a significant decline compared to one year ago (16 percent).
"While it is hard to say exactly why small and mid-sized businesses expressed less concern about taxes and regulatory policies, it is all but certain they are paying more in taxes as business improves," said Dr.
Small Businesses Lack Disaster Preparedness Plans
Despite several natural disasters in the past year (hurricanes, floods, and fires), only 44 percent of businesses reported they have emergency plans in case of a natural disaster established currently. Fifty-one percent cite they would need to acquire outside funding to address the unforeseen impact or losses to the business, with 31 percent citing they would seek a bank loan in order to do so.
The PCA Index is a quarterly indicator produced by the
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