C-Suite Wednesday – 65% of Small Business Owners are Not Interested in a Loan Says NFIB
June 22, 2022
Delaney Sexton
Contributing Editor
C-Suite Wednesday – 65% of Small Business Owners are Not Interested in a Loan Says NFIB
“To combat inflation, the Federal Reserve will rapidly raise interest rates to slow spending. The prime rate of interest hit 20% during the last big inflation fight over 40 years ago. For this round, prime started at 3.5%. It will go higher, and borrowers will pay more for loans. But for now, borrowing is still relatively inexpensive but maybe not for long,” reads the NFIB May Small Business Economic Trends Report.
Here are the facts:
• A net 54% of small business owners expect worsening business conditions six months from May, the lowest level recorded in the 48-year-old survey.
• In the last three months, a net 24% of owners are experiencing lower earnings compared to the prior three months. This increased by 7 points in May.
• 23% of small business owners are borrowing at least once every three months, a slight decrease of 3% from April.
• A net 4% of regular borrowers reported that it was harder to get a loan compared to three months ago.
• 65% of small business owners said they were not interested in a loan.
• Unchanged from April, 2% of borrowers reported that their borrowing needs were not satisfied in the last three months. With a 3% decrease, 22% of borrowers had all of their borrowing needs satisfied in the last three months.
• Of regular borrowers, a net 4% of borrowers expect harder credit conditions in the next three months, though this is a slight improvement from April.
• A net 14% of regular borrowers reported that interest rates were higher in May than three months ago. This dropped by 2% since April.
• The average interest rate paid on short-term loans by borrowers was 5.7% in April.
• The single most important problem that small business owners face is inflation, followed by quality/cost of labor and taxes.
• In an attempt to counteract inflation, a net 72% of small business owners have raised prices from three months ago, one of the highest readings since 2017. A net 47% of owners also plan to raise prices in the next three months.