By many measures, the U.S. economy is performing well. Employment figures are strong, in part, because small businesses are creating jobs. Firms seeking capital for business growth are finding success in securing financing. Even companies with bad credit are able to obtain funding in the current economic environment.
At 3.8 percent unemployment, the job market is robust. According to the Labor Department's Jobs Report for June 2018, there are more positions available than there are people to fill them. In this environment, companies frequently recruit new employees from competitors because there are not enough new entrants in the jobs market to fill vacancies. Many openings are at small businesses, which have long proven to be the engine for private sector jobs creation.
The Small Business Optimism Index increased in May to the second highest level in the National Federation of Independent Business (NFIB) survey's 45-year history. The index rose to 107.8 with small businesses reporting high numbers in several key areas including compensation, profits, and sales trends.
"Main Street optimism is on a stratospheric trajectory thanks to recent tax cuts and regulatory changes. For years, owners have continuously signaled that when taxes and regulations ease, earnings and employee compensation increase," said NFIB President and CEO Juanita Duggan.
The NFIB report for May reported that positive sales trends are at the highest level since 1995, and expansion plans are the most robust in survey history.
Increasing numbers of the small and medium-sized businesses looking to expand their operations are finding success in securing capital both from traditional banks and from non-bank lenders, including institutional investors.
According to the Biz2Credit Small Business Lending Index, approvals of small business financing requests hit a post-recession record high during May. Big banks (assets of $10 billion+) -- typically the most conservative lenders -- are granting more than a quarter (25.9%) of the loan applications they receive. Further, regional and community banks, which process many SBA loans, are approving nearly half (49.4%) of their funding requests, the highest figure for small banks in three years. Institutional lenders (pension funds, insurance companies, and others) are granting almost two-thirds (64.7%), of the loan requests they get from small companies. They have become important players in small business lending.
Small businesses can take advantage of the current economic environment in three ways:
- Businesses that are contemplating expansion should apply for loans now. Banks and non-bank lenders have opened the spigots and are granting requests. Meanwhile, interest rates are still relatively low. However, the Federal Reserve has signaled that they will continue to rise. Delaying will increase your cost of capital
- Invest in making their websites mobile friendly. The majority of traffic likely comes from smartphones and other mobile devices. Too many small business owners establish a website and then do little to update it for long periods of time.
- Put more time into branding. Take advantage of social media, which is an inexpensive way to improve a firm's digital presence. If you are not active on social media or don't know in what direction to go, assign the task to employee who is engaged in social media or hire a freelancer or digital p.r. agency to help you.
SBA Administrator Linda McMahon, an appointee of President Trump, recently credited the Administration's tax cuts for driving economic success:
With more money in their pockets, Americans are spending again - and that's good news for small businesses... The economy is strong, and there are more jobs available than those seeking them. Now is a truly great time to start or grow your business.