Small businesses say challenges in accessing capital is impeding their ability to grow, and if the credit crunch continues, some say they may be forced to close.
That’s according to Goldman Sachs’ 10,000 Small Business Voices, which released its most recent survey on Wednesday. The nationwide survey of 1,240 small business owners was conducted Oct. 9-12, with respondents from 48 U.S. States, Puerto Rico and Washington, D.C.
The survey comes at a time when small businesses are expressing concern over higher interest rates as they grapple with increasing costs of conducting business.
The survey revealed that 78% of small business owners are concerned about their ability to access capital and 29% say they can’t afford to take out a loan given current interest rates.
In addition, 85% say if access to capital continues to tighten it will impact their growth forecast. Among the respondents who say a credit crunch on this trajectory would impact their forecasts for growth, 67% said they would halt expansion plans, and 21% would close their business, according to the survey.
Challenges for access to capital are even “more stark” for minority-owned businesses. According to Goldman Sachs, “Black small business owners have a higher application rate for business loans or lines of credit, but have a much lower rate of receiving the full funding requested compared to their white peers.”
According to the survey, 43% of Black business owners have applied for a loan or line of credit in the past year, versus 30% of White small business owners. Yet only 26% reported receiving all of the funding they requested, versus 51% of White small business owners. In addition, 81% of Hispanic small business owners and 85% of Black small business owners express concern about their ability to access capital.
Owners expressed concern, too, about the overall business climate and the state of the U.S. economy.
Comparing 2023 with the last four years, 31% consider 2023 the most difficult year for business. And 37% said 2020’s pandemic year was more difficult.
The survey also found that 33% owners applied for a new business loan or line of credit in the past year, with 65% of those who have applied stating they found it difficult to access affordable capital.
And 64% said they have outstanding loans or lines of credit or both. Of those, 35% have a variable interest rate. Meanwhile, 88% of those with variable interest rates have seen their interest rates increase, with 58% saying the increase has been between 3-10%.
Compared to three months ago, 46% believe the economy has gotten worse.
Adina Genn
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