A new study found that 75% of small businesses are optimistic about their finances in 2024. Despite 71% reporting inflationary pressures and 77% saying they are concerned about their ability to access capital, 62% of small business owners expect their profits to increase this year.
Furthermore, 57% expect to create jobs this year. Also, 28% rate the economy as good or excellent—a 9% increase from three months ago. These are among the key findings of a survey of small businesses released by Goldman Sachs called 10,000 Small Businesses Voices. This study aims to reveal concerns about current economic headwinds. It also analyzes optimism for the future.
The Federal Reserve’s proposed Basel III Endgame would increase the capital holding requirements for larger banks, including regional banks. Small business owners depend on these banks for lending. The proposed policy would further squeeze small businesses.
The Federal Reserve closed the comment period on the proposed Basel III Endgame rule on Jan. 16. Yet, small businesses continue to voice concerns about accessing affordable capital, such as business loans and lines of credit:
- If access to capital tightens further, 86% say it will impact their growth forecast. The Federal Reserve acknowledges this outcome if the proposed Basel III Endgame were enacted.
- Businesses reporting their growth forecast would be adversely impacted. They said they might be forced to take actions such as:
- Halting expansion plans (62%),
- Laying off workers (43%),
- Ending strategic investments ( 38%
- Closing their business (21%)
- Given current interest rates, just 32% believe they can afford to take out a loan.
- Of respondents who applied for a loan in the past year (35%), 79% found it difficult to access affordable capital. Only 40% received all the funding they requested.
- Small business owners are desperate to access capital. 28% percent of loan applicants said they had taken out a loan or line of credit with predatory payment terms.
The nationwide survey of 1,459 small businesses was taken January 15-21, 2024. Respondents came from 48 U.S. States, Puerto Rico, and Washington, D.C. For more information on the survey, please visit www.gs.com/glass-half-full.
