Small-business owners are finding it easier to get a loan now than at any time since before the financial crisis.
They also say that business conditions have improved substantially over the past 12 months and that they are more optimistic about prospects for growth than they have been in years, according to results of a survey of more than 600 business owners taken in early February.
In the survey, conducted jointly by Wells Fargo and the Gallup Organization each quarter, 40% of respondents said they had found it somewhat or very easy to obtain credit over the past year, up from 34% three months earlier and 30% in last year’s first quarter. That figure had been stuck in the 20s for much of the past eight years and had not hit 40% since the third quarter of 2008.
Doug Case, small-business segment manager at Wells Fargo, said the economy has improved to the point that many business owners are more confident applying for credit than they were even a year or two ago.
“When we look at our own portfolio, we are definitely seeing stronger balance sheets, stronger cash flows, which support stronger approval rates,” Case said.
Forty-five percent of respondents said that their firms’ revenues had increased over the past year, up from 38% a year ago. Not since 2008 had so many business owners reported revenue growth.
Asked how they would rate their companies’ financial situation, 71% said very good or somewhat good, up from 66% three months earlier and 57% a year ago. Also, 79% of respondents said that they expect their firms’ financials to improve further in the next 12 months.
Wells Fargo and Gallup have been conducting the survey since 2003 as a way to gauge business confidence. The survey’s business confidence index – a measure of current and future business conditions – was 100 in the first quarter, up from 80 just three months earlier and 67 in last year’s first quarter. The jump from 80 to 100 was the highest quarter-over-quarter increase in 13 years, Case said.
The index last hit the 100 mark in the third quarter of 2007. For several quarters during the depths of the recession, it dipped below zero.
The survey does not specifically ask what drives confidence, but Case said he suspects that the spike in the index can be traced to President Donald Trump’s promises to cut corporate taxes and ease up on government regulation.
"You have an administration coming in making a lot of promises around regulation [and] that’s music to the ears of small-business owners in this country,” Case said.