Some small-business owners may soon be seeking more investment loans to grow their companies, as new data indicates entrepreneurs are increasingly confident. The National Federation of Independent Business (NFIB) Small Business Optimism Index jumped 1.9 points in February to 90.8.
The index surveys business owners on 10 different components, eight of which improved in February. Report data shows the number of entrepreneurs planning on increasing capital spending and investing in inventory was strong, but company leaders are still hesitant about the current economic situation.
"While the Fortune 500 are enjoying record high earnings, Main Street earnings remain depressed," said Bill Dunkelberg, NFIB chief economist. "Far more firms report sales down quarter-over-quarter than up."
Many report some struggles, even with optimism up
While the index is showing improvement, small-business owners are still facing difficulties as they attempt to expand their operations. The data showed 18 percent of entrepreneurs cited low sales as their main company problem, with 33 percent claiming their sales had declined over the past three months. Limited consumer spending and uncertain markets aren't doing much to help boost business, and political gridlock in Washington could be doing little more than adding to the pressure entrepreneurs face.
"Washington is manufacturing one crisis after another - the debt ceiling, the fiscal cliff and the sequester," said Dunkelberg. "Spreading fear and instability are certainly not a strategy to encourage investment and entrepreneurship."
Demand for business financing low in February, but could rise
Even with confidence rising, the demand for loans was still rather limited in February, according to report data. Twenty-nine percent of respondents felt all their credit needs had been met, and only 7 percent claimed the opposite. While 7 percent of business owners claim they feel loans are more difficult to get in the current economic climate, twenty-nine percent of entrepreneurs claim they are taking out loans on a regular basis.
With more people believing project finance will be harder to obtain in the coming months, those in need of business loans may want to turn to smaller banking firms that give loans to startups and mid-sized operations more frequently. Not only can this be a new way for an entrepreneur to get the growth capital he or she needs to expand a business, it also gives company leaders a chance to experience more personalized cash management options and unique banking solutions.
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