Some new reports published from several sources provide great insight into the state of the business lending landscape, how business owners feel about 2024, financing problems and preferences, and much more data that can help industry stakeholders. These reports include the first such report from Bluevine, the Pathward "Small Business Credit Habits and Needs" report, and the Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25). The following are the key findings from each report.
In Bluevine's BOSS, they “surveyed over 1,100 small businesses nationwide - with annual revenue between $100,000 and $5 million – about the strategies and tactics that contributed most to their success in 2023, along with the decisions and investments they expect to make in 2024 to reach their goals.”
Some of the most notable findings are:
More SMBs will seek access to capital this year (45%) compared to 2023 (38%).
72% of Business Owners are First-Time Entrepreneurs
More than half (54%) of SMBs sell local/regional, compared to only about one-third (31%) who sell nationwide
With a shared sentiment of optimism for the year ahead, nearly double the amount of business owners are projecting revenue gains of 50% or more compared to 2023
74% operate their business with 2-10 full time employees
About 26% of SMBs seek and receive the best advice for growing their business from online forums
Of those business owners seeking access to capital in 2024, a new credit card tops the list at 55%
Asked to rank the main attributes for selecting a business bank, nearly half named “No Monthly Fees” - remarkably higher than the second most important attribute, “Unlimited Transactions,” at 28%
Of those who borrowed via a business loan, 73% did so via Bank and 39% via SBA
Latest Pathward Research
1,000 Nationally Representative US Small Business Owners with 10-200 employees
“Based on a survey of 1,000 small business owners and executive decision-makers, the report aims to uncover their financing needs compared to the loan products available to them.”
Only 32% of small businesses felt they were knowledgeable enough about asset-based loans to explain them to another person – compared to SBA loans (60%), business line of credit (57%), and equity financing (39%)
Four in five small businesses (81%) experienced the consequences of a cash flow issue.
For the seven to 12 months of the year preceding the survey, 34% of small businesses reported having just enough cash on hand to stay operational.
70% report their company is in a growth mode
While most small businesses describe themselves as growing or steady, 34% report that between 6-12 months of last year, they had just enough cash on hand to remain operational.
As a result of cashflow issues, 18% of those surveyed said they were unable to qualify for financing or loans
More than a quarter of companies have had to delay expansion or were unable to capitalize on an opportunity
56% of small businesses believe they will need financing in the next six to 12 months.
Expansion of operations is the top reason companies may need financing
The Loan Product most feel knowledgeable enough to explain to another person is an SBA loan followed by a Business Line of Credit.
The business line of credit and SBA loans are the most common type of financing small businesses have used in the past across the general small business population.
Out of these options- Business Line of Credit, SBA, Equity Financing, Commercial Real Estate, Term Loan, Asset Based Loan- Asset Based loans have limited consideration when presented amongst this array of loan options, which can be considered due to lack of awareness and education
47% said they turn to professional influencers like bankers, CPA, and lawyers if they were interested in an asset-based loan
Equipment Leasing and Finance Association’s Survey of Economic Activity
For the Monthly Leasing and Finance Index: January 2024, here are the most notable findings.
overall new business volume for January was $9.3 billion, up 6% year-over-year from new business volume in January 2023
Charge-offs were 0.5%, up from 0.4% the previous month and up from 0.3% in the year-earlier period.
Credit approvals totaled 76%, up from 75% in December
Volume was down 26% from $12.5 billion in December following the typical end-of-quarter, end-of-year spike in new business activity.
Links to the reports:
Bluevine BOSS Report.
Pathward Research
Equipment Leasing and Finance Association’s Survey of Economic Activity