75% of small businesses aren’t trying to secure financing these days

Most businesses think we’re already in a recession or it’s coming early this fall. The good news is, most are fairly confident they’ll survive it. There’s just one major catch.

Businesses short on cash are balking at high interest rates and waiting (perhaps in vain) for banks to play ball. Fifty-eight percent of small business owners that sought or secured a bank loan from April through July cited high interest rates as a major hurdle, according to a National Federation of Independent Businesses (NFIB) survey.

“While most owners are currently satisfied with their ability to borrow, the escalating cost of financing associated with high interest rates is a significant issue for many,” says Holly Wade of NFIB’s Research Center. The survey’s data backs that up – 75% of business owners didn’t borrow or try to secure a loan from their bank or a credit union.

Small businesses carrying small debt load are in the driver’s seat

For a snapshot of small businesses’ current banking habits and preferences, plus their opinions on the economy, here are some of the highlights from NFIB’s survey (646 small business owners answered via an email sent to 20,000 people in late July):

• Businesses seeking financing are eyeing operating and inventory expenses (33%), to replace capital assets or make repairs (26%), expand (20%) or refinance or pay down debt (5%). Thirteen percent answered “other.”
• Sixty-four percent rely on small or local banks to do business, 18% rely on large banks like Chase, Citi and Bank of America, and 16% bank with medium-sized banks like PNC and Schwab.
• 52% say the country is in a recession and an additional 17% think it’s coming before Christmas. Thirty-one percent predict a recession sometime in 2024.
• More than half (54%) aren’t concerned about the health of their banks, an improvement since the last NFIB survey in April (just 31% then). The feds’ efforts to back bank risk-taking and prevent another failure like Silicon Valley appears to have allayed many businesses’ fears of a banking collapse.