NFIB survey shows higher interest rates impacting small business operations, owners expect a solid holiday season
The NFIB Research Center released a third credit-focused survey (a series that started in April 2023) assessing small business owners’ banking and financing activities. This survey also assesses 2023 holiday sales and small business owners’ evaluation of economic conditions locally and nationally.
“More small business owners report that higher interest rates are impacting business operations,” said Holly Wade, Executive Director of NFIB’s Research Center. “Even with financing concerns, small business owners have expectations for a solid holiday season but aren’t confident in their local or national economy going into the New Year.”
Some of the highlights of the survey included:
Financing Concerns
Eighty percent of small business owners accessing credit in the last three months reported high interest rates as their largest financing complaint, a significant increase from July 2023 (58%).
Five percent reported the amount of credit approved being too low as their largest complaint, and another 4% reported the collateral requirement was too big. Four percent reported the repayment schedule was too short, and 4% reported too much paperwork. Another 4% reported that the application, approval, or closing process was too slow.
Twenty-one percent of owners reported their major financing complaint was having a significant impact on their business. Thirty-five percent reported a moderate impact, and 44% reported a mild impact.
Holiday Sales
About one in five small business owners report that they generally experience higher sales volumes during the holidays.
When asked about their sales volumes during this past Black Friday, Small Business Saturday, and Cyber Monday, 17% reported strong sales volume, 35% reported moderate, and 29% reported weak.
When asked about their holiday sales volume expectations over the next month, about a quarter (26%) anticipate strong holiday sales volume, 55% have moderate expectations, and 20% have weak expectations.
Experience Accessing Financing
Fifty-five percent of owners accessing credit in the last three months reported that interest rates were a significant issue. Thirty percent reported that it was a moderate issue, and 11% a mild issue. Interest rates were not an issue for 4% of small business owners, a significant decline from 23% in July 2023.
Financial State of Business and Economy
About 16% evaluated the current financial state of their business as excellent. Forty percent reported good, and 35% reported okay. Only 8% reported the current financial state of their business as poor.
When asked about the current state of their local economy, only 2% reported excellent, 21% reported good, and 55% reported okay. Twenty-two percent reported poor.
When asked about the current state of the national economy, 67% reported poor, up nine points from July. Zero percent reported excellent, 5% reported good, and 28% reported okay.
As for when the U.S. economy will enter the next recession, a little over half (58%) of small business owners think the U.S. is already in a recession. Fifteen percent think the next recession will start in the January to March 2024 period. Twelve percent believe a recession will occur in the April to June 2024 period, 7% reported the July to December 2024 period, and 9% reported January 2025 or later.
Beneficial Ownership Requirements
The Financial Crimes Enforcement Network (FinCEN) within the Treasury Department finalized the beneficial ownership information reporting requirement rule in December of 2022. This regulation requires corporations or limited liability companies (LLCs) with 20 or fewer employees and $5 million or less in gross annual revenues to report beneficial ownership information containing personally identifiable information of small business owners to FinCEN.
A beneficial owner is defined as anyone who owns 25% or more of the ownership interests of a reporting business, or an individual who has substantial control over a reporting business. NFIB opposed the Corporate Transparency Act, which created the beneficial ownership information reporting requirements.
The full survey is available with further information on types of financing and answers to frequently asked questions.
