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Main Street Smiles (Cautiously): Optimism Rises Despite Inflation and Lending Worries

Main Street Smiles (Cautiously): Optimism Rises Despite Inflation and Lending Worries
Posted on February 18, 2024

While inflation remains a stubborn foe, a wave of cautious optimism is washing over Main Street. 

A new survey by Goldman Sachs 10,000 Small Business Voices reveals 75% of small business owners feel more confident about their financial trajectory in 2024 compared to last year. 

This aligns with broader trends of increased consumer and business confidence in the economy.

Job Creation and Profit Projections Paint a Rosy Picture: 

More than half of surveyed businesses anticipate creating jobs and increasing profits this year, suggesting a belief in future growth. 

Jill Bommarito, CEO of Detroit-based Ethel's Baking Company, echoes this sentiment, sharing positive experiences with consumer spending and easing supply chain issues.

But Headwinds Lurk: 

Despite the positive outlook, challenges remain. Inflation continues to be a major concern for 71% of businesses, and access to capital presents a significant hurdle. 77% of respondents voiced worry about securing funding, with high interest rates and proposed regulations further complicating matters. 

The survey also found that 86% of businesses fear their growth will be hampered if accessing capital becomes more difficult.

Affordability and Predatory Practices: 

Only 33% of owners believe they can afford loans, and nearly 80% of those who applied in the past year faced difficulty finding affordable capital. Alarmingly, 28% reported encountering predatory loan terms, highlighting the struggles businesses face. 

The National Federation of Independent Business (NFIB) further underscores this issue, reporting an average short-term loan rate of 9.8% in December 2023, up from 7.6% the previous year.

Bommarito, representing many small businesses, emphasizes the critical need for access to working capital. She highlights the perception of small businesses as "riskier bets," despite their vital role in the economy.

While optimism flickers on Main Street, it's tempered by concerns about lending and affordability. As policymakers and lenders navigate these challenges, supporting small businesses with accessible and affordable capital will be crucial for sustaining both individual companies and the economic foundation they provide.

Information borrowed from https://www.cnbc.com/2024/02/01/small-business-optimism-rises-despite-inflation-goldman-sachs-survey.html

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