SBA Hot Topic Tuesday – 50% of Small Business Owners Expect the Economy to Worsen

January 10, 2023

Delaney Sexton
Contributing Editor

SBA Hot Topic Tuesday – 50% of Small Business Owners Expect the Economy to Worsen

“The negative impact of the dramatic increase in interest rates has not been fully felt, and more rate hikes are almost certain early in the year,” says NFIB Chief Economist Bill Dunkelberg. “Overall owners are not optimistic about 2023, sales and business conditions are expected to deteriorate. Owners will focus on their businesses and do their best to deal with the fallout from all of the uncertainties in a year of slow growth and still-persistent inflation.”

Here is what the NFIB is reporting in their December Small Business Economic Trends.

Credit Conditions:
• 7% of borrowers found their previous loan harder to obtain in the month of December.
• 25% of small business owners found their borrowing needs to be fulfilled, a 3% increase from November, while 2% of small business owners were unsatisfied with their borrowing needs.
• Almost two-thirds of borrowers reported that they were not interested in a loan.
• 3% of owners stated that financing was their top business problem.
• 9% of borrowers expect credit conditions to become harder during the next three months, the highest reading in the last six years.
• 23% of small business owners that regularly borrow reported that the relative interest rate paid increased compared to three months ago.
• The average interest rate paid on short-term loans was 7.7%, a slight decrease from last month.

Small Business Optimism:
• The Optimism Index remains below the NFIB’s 49-year average for the twelfth consecutive month.
• More than half of small business owners expect worsening business conditions over the next six months, an 8% increase from November.
• The NFIB’s Uncertainty Index increased by 3% in December as small business owners become more concerned with the economy.

NFIB December Small Business Economic Trends