For the first time since 2020, an increased number of small businesses participating in the Federal Reserve's 2023 Small Business Credit Survey (SBCS) reported that their revenue and employment levels had risen over the past 12 months. In addition, the survey showed that the number of small businesses operating at a profit increased from 35% in 2021 to 45% in 2022.
The Fed survey reached nearly 8,000 small merchants nationwide, collecting information about their business performance, challenges, and credit-seeking experiences.
Still, concerns about the future persist.
Despite the positive news, the report also found that expectations have worsened as business owners face an uncertain future. A recent JP Morgan survey came to a similar conclusion - that small firms are more confident about their prospects than the economy.
According to the Fed survey, four in five small businesses faced challenges related to rising costs, and nearly half of the respondents reported difficulties paying operating expenses or navigating uneven cash flow. Almost all merchants also reported some operational challenges. Specifically, needing help to hire or retain qualified staff or deal with issues in their supply chains.
Small merchants seek funding for their business needs.
To cover these increasing costs, the Fed found that small businesses were more likely to use pandemic-related government programs and personal sources for financing rather than traditional financial institutions. Two-thirds of respondents used personal savings or funding from friends/family over the past five years.
Meanwhile, as pandemic-related funding programs ended, the data show an accompanying rise in the number of businesses that sought funding in the form of loans, lines of credit, or merchant cash advances, which increased to 40% in 2022, up from 25% in 2021.
Cloudy skies ahead?
In the latest report from the National Federation of Independent Business (NFIB) on small business trends, inflation remains a top problem. "While inflation is starting to ease for small businesses, owners remain cynical about future business conditions," said Bill Dunkelberg, chief economist, NFIB. "Owners have a negative outlook on the small business economy but continue to try to fill open positions and return to a full staff to improve productivity."
We can help.
When you choose Quikstone Capital Solutions for a business cash advance, you get a funding advisor that cares about your success. Since 2005, Quikstone has helped thousands of merchants with easy, fast, and flexible working capital for all their business needs. Quikstone has an A+ rating from the Better Business Bureau, and 80% of our merchants return for additional funding. If you accept credit cards, you could qualify for up to $250,000 and have your funds deposited in your bank in 2 to 5 business days. Contact us today to learn more.
