Small businesses don’t see much cause for optimism
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Small business optimism is at a seven-month low, according to a survey from the National Federation of Independent Business released Tuesday.
Fewer companies are looking to expand, sales expectations are down and, despite the fact that borrowing money is really cheap right now with interest rates near historic lows, only 3% of businesses say they’re interested in taking on additional debt.
Back in 2018, Sophie Blake took out a business loan for her Virginia-based jewelry store because, she said, she was feeling good about the economy.
“And I was very aggressive. I was very excited,” Blake said. “We did a big renovation of our store. I felt confident at the time that we would be able to pay it back.”
Right now, she’s not so confident. Blake’s store now has a government disaster loan on its books, and it’s borrowed from the Paycheck Protection Program.
Blake said the idea of taking out a loan to expand her business like she did in 2018 is out of the question.
“I’m not sure if we’re going to be around at the end of the year if things go the way they’re going,” she said.
And that’s why most businesses don’t want to borrow any money right now, said Bill Dunkelberg, chief economist at the NFIB.
However, some companies are taking advantage of the lowest interest rates we’ve seen in a long time.
“So, the banks I’m familiar with are doing a lot of lending to small construction firms, to build one or two or three new houses, some bigger construction projects like a Dunkin’ Donuts, or small hotels,” Dunkelberg said.
At the Bank of Southern California, CEO Nathan Rogge has been looking to make loans to businesses in other industries.
“Industries that are associated with the internet [or] anything that’s medical,” he said. “We’re looking at distribution, wholesalers — all doing relatively well.”
Rogge said those are all businesses that have valuable collateral and pretty solid cash flow, considering. That’s two things a lot of other businesses don’t have right now.
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