Small Business Owners are Optimistic Despite Concerns with Access to Capital Says Goldman Sachs
February 28, 2024
Delaney Sexton
Contributing Editor
Small Business Owners are Optimistic Despite Concerns with Access to Capital Says Goldman Sachs
“As interest rates increased, the payments on my loan to expand my business have almost doubled, forcing me to halt my growth plans,” says Liz Field, the founder and owner of The Cheesecakery. She went on to say to Goldman Sachs: “Unfortunately, the capital crunch I am facing is not unique to my business, and I fear the squeeze on small business will only worsen if the Federal Reserve’s proposed Basel III Endgame is enacted.”
Goldman Sachs data found that more than three-quarters of small business owners are concerned about their ability to access capital. More than half of small business owners are unable to afford to take out a loan due to current interest rates, and about a third reported they would be able to afford to take out a loan even with the current interest rates.
86% of small businesses stated that if access to capital continues to tighten, their growth forecast will be impacted. In the case of their growth forecast being impacted, 62% said they would have to halt expansion plans and 43% would have to lay off workers.
In the last year, 35% of owners reported applying for a new business loan or line of credit. When applying for credit, 79% of small business owners found it difficult to access affordable capital. Less than half (40%) of applicants received all the funding requested. More than a quarter admitted that they took out a loan or line of credit with payment terms that felt predatory.
Undeterred by financial pressures, small business owners are staying positive about 2024. Three-quarters are optimistic about their business’s financial trajectory this year. This year, 57% of owners expect to create new jobs and 62% expect to increase profits.