Credit Conditions are Stable While Small Business Optimism Fell

September 10, 2024

Delaney Sexton
Contributing Editor

Credit Conditions are Stable While Small Business Optimism Fell

“The mood on Main Street worsened in August, despite last month’s gains,” says NFIB Chief Economist Bill Dunkelberg about the August Small Business Economic Trends report. “Uncertainty among small business owners continues to rise as expectations for future business conditions worsen.”

Here’s what the report has to say:

Optimism Index

The Optimism Index dropped 2.5 points in August, though optimism has remained higher than it was in the early months of 2024. The outlook for future business conditions in the next six months stayed consistent with the optimism index and dropped in August. Overall, 13% of owners expect conditions to worsen in the future, an increase of 6% from July. The increase is insignificant compared to the 25-39% of owners in the first half of 2024 that expected conditions to worsen.

Uncertainty Index

Small business owners are feeling more uncertain in August after the Uncertainty Index rose by 2 points. This month’s reading is the highest level it has reached since October 2020. Compared to January 2024, the Uncertainty Index is up by 19 points, and it is also 10 points above the June 2024 reading.

Credit Conditions

Indifferent to the rise of uncertainty, credit conditions are stable. In August, the credit condition measurements saw little to no change.

  • Borrower satisfaction increased by 1% with 26% of borrowers having all their borrowing needs fulfilled.
  • Not all borrowers were satisfied since 3% said that all their borrowing needs were not met (up 1%).
  • In the next three months, 8% of borrowers believe that it will be harder to get a loan (up 1%).
  • 27% of borrowers said they borrowed at least once every three months (unchanged).
  • Compared to three months ago, 7% of small business owners had a more difficult time getting their most recent loan in comparison to their last loan (up 1%).
  • 15% of small business owners paid a higher relative interest rate on their most recent loan (unchanged).
  • The average interest rate small business owners are paying on their short-term loan is 9.5% (up 0.1%).

Source:
NFIB Small Business Economic Trends Report August 2024