June 29, 2022
C-Suite Wednesday – 50% of Small Businesses Have Taken Out a Loan Due to Inflation
“Historic inflation is top-of-mind and deeply troubling to small businesses right now,” says U.S. Chamber of Commerce Vice President of Small Business Policy Tom Sullivan. “But at the same time, there is confidence among small business owners that customer demand will remain strong, and this quarter’s Index shows they want to hire and plan on meeting that demand in the coming months.”
According to a U.S. Chamber of Commerce & MetLife Small Business Index conducted during the first half of May, inflation is becoming a top concern for small businesses while COVID concerns are waning. The Small Business Index for Q2 2022 reached a score of 66.8, the highest score since the start of the pandemic.
These are the facts:
• Two-thirds of small business owners report that their business is in good health which is on par with the last pre-pandemic reading. They also found that small businesses that have more employees are more comfortable with their business health.
• About three-quarters (73%) of small business owners are comfortable with their cash flow.
• 30% of the survey participants rate the overall U.S. economy as good, and 37% rate their local economy as good. However, half of the respondents (49%) say that the U.S. economy is poor.
• 44% of owners state that inflation is the top challenge impacting small businesses, an 11-point increase since Q1 2022 and a 21-point increase from Q4 2021.
• Nearly 90% of small businesses are concerned about the impact of inflation on their business with about half reporting they are very concerned.
• Four out of every five reports that rising prices had a significant impact on their business.
• Almost half the business owners report that they have taken out a loan to cover rising costs from inflation.
• Three-quarters of small businesses are concerned about the impacts of rising interest rates.
• The number of small businesses (15%) that indicate rising interest rates are the top concern for the small business community more than doubled from last quarter.
• 62% of small businesses are using their personal savings and 52% are going to local banks or credit unions for capital to grow their business.
• Half of small businesses believe that it will be 6 months to a year before the small business environment returns to normal.