LOMBARD, Ill. (12/28/15)--Small business owners are optimistic about their prospects for 2016--a positive indicator for credit union lending, according to a new report.
Raddon’s Small Business National Research report found that 59% of small businesses expect an increase in sales, while only 6% expect a decline.
That’s a turnaround from recent years, explained Marcus Rothaar, financial analyst at Raddon Financial Group.
“Although the recession that began in 2007 officially ended in 2009, consumers were still feeling the pinch of a 9.8% unemployment rate when Small Business Saturday was introduced in 2010,” said Rothaar.
“A Consumer Confidence Index of 90 represents a more stable economy, so with the index still at a gloomy 54.1 in November 2010, it was clear the economic recovery still had a ways to go in the eyes--and wallets--of consumers,” Rothaar added. “By extension, 2010 was also a difficult time for small businesses. According to Raddon’s 2010 survey of 1,200 small businesses, a third of businesses projected declining sales revenue that year and only a quarter expected a sales increase.”
Now, the majority of small businesses are more optimistic with their economic outlook, with 29% finally beginning to see signs that the economy has improved, and another 22% having seen definitive evidence that the economy is improving, explained Rothaar.
The increase in small business optimism is a positive sign for financial institutions on a number of fronts.
“Loan demand increases as the health of small businesses strengthens,” said Rothaar. “Financial institutions have played a vital role in the resurgence of small businesses since the end of the recession by providing the needed financing to help spur growth.
“In the last three years, half of small businesses have applied for a loan, with 20% applying more than once. Of those applying for loans, 90% were successful in obtaining a loan. The opportunities and competition to provide these small business loans will be strong in 2016.”