May 12, 2015
By Bob Coleman
Editor, Small Business Lending Stats Tuesday
Several factors contributed to the decrease in optimism this quarter, including:
Lower revenue – In the April survey, 42 percent of small business owners reported that their company’s revenues increased over the past 12 months, down from 49 percent in January. However, the percent of business owners indicating revenue had increased is up from a year ago when it was 36 percent.
Slight drop in credit expectations – When asked about access to credit, almost a third (30 percent) of small business owners said it was very or somewhat easy to obtain credit when they needed it, down slightly from 34 percent in January. Another 25 percent said credit was very or somewhat difficult to obtain in April, up from 20 percent in January and relatively unchanged from a year ago when it was 24 percent.
In a few areas, small business owners reported incremental improvements in their business, including:
Highest Cash Flow in Seven Years – Fifty-eight percent of small business owners reported that their company’s cash flow was very or somewhat good over the past 12 months, up from 54 percent in January and 50 percent a year ago. The percentage of business owners reporting good current cash flow is the highest since the first quarter of 2008.
Improved Financial Situation – Sixty-five percent of small business owners rate their company’s financial situation as very or somewhat good, unchanged from the January survey and up from 57 percent a year ago.
“The latest Index scores show that while small business owners are in a better place now than a year ago, some still face challenges in this economic environment,” says Lisa Stevens, Wells Fargo head of Small Business. “A decline in revenues can influence business owner perceptions of current conditions and temper their optimism for the year ahead. Despite the pull back in optimism this quarter, there’s more certainty in today’s economy than at this time last year, and we’re seeing more promising trends.”
When business owners were asked to identify the most important challenge facing their business, several concerns rose to the top of the list in the April survey. Business owners said their top concern was attracting customers and finding new business (14 percent), followed by government regulations (11 percent) and the economy (11 percent). These top challenges have been consistently reported as top concerns of small business owners since early 2013, when the question was added to the survey.
View the Wells Fargo report here