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Corporate America Hinges On Presidential Election

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It’s one day to election day in the U.S., and as always, national economic issues are at the top of voters’ minds. The stakes are high for businesses of all sizes, and the latest data on corporates in America makes that abundantly clear. Small businesses are anxious, and there is evidence that large corporates’ cash management and investment strategies are also being shaped by political uncertainty. Small business employment, cash reserves and FinTech investment plans are all being shaped by this year’s presidential election. We share all the details below.

 

70,000 small business loans approved by the SBA in FY2016, the administration reported late last month. That amounts to $28.9 billion in small business financing from the government body — a new record overall and for the volume of its flagship lending program 7(a), which provides working capital financing, asset-based financing and refinancing support. The Small Business Administration also revealed new records set in the value of loans provided to minority- and women-owned small businesses in the fiscal year. In its third year in a row of growth, the SBA’s 504 loan program, which offers small businesses long-term, fixed-rate financing for modernization efforts, grew by more than 10 percent last fiscal year.

38% of SMB owners “very concerned” about presidential election, and their anxieties will have to persist until voters head to the polls Tuesday (Nov. 7). A report from the Pepperdine Graziadio School of Business and Management, released last week, found the number of small business owners in the U.S. “very concerned” about the election is double the 19 percent that report no concern at all. While the presidential elections are sure to have a significant impact on small business policy in the country, Pepperdine assistant professor of finance Craig Everett said in a statement that the findings are similar to what was seen in 2012, which he described as “a lot of trepidation, with business owners concerned about the future and standing on the sidelines a bit.” He did note, however, that there could be some cause for concern with SMBs reporting a lack in their pursuit of aggressive growth strategies and working capital financing.

26% of U.S. corporate treasurers plan to spend more on FinTech next year, but it may not be anything to celebrate. The statistic, released by East & Partners in its Treasury FinTech Index, reveals that the U.S. lags behind its counterparts in other parts of the globe when it comes to investing in FinTech. Take Singapore, for instance, where 67 percent of treasurers there plan to boost FinTech spend in 2017. Even more U.K. treasurers said the same. In a statement, East & Partners Principal Analyst Paul Dowling, who also served as one of the report’s authors, said it is curious how behind the U.S. is in its analysis. “What’s surprising is the U.S.’s ranking in the adoption of FinTech, languishing behind virtually all of these other global players,” he said in a statement.

A +7 point increase in the AFP’s Corporate Cash Indicators report means U.S. corporates are hoarding more cash than they were a year ago. According to the Association for Financial Professionals, whose latest index was released last week, businesses in Q3 piled up their cash reserves and are likely to continue doing so in the fourth quarter, albeit at a slower pace. Still, AFP President and CEO Jim Kaitz said in a statement, the spike in the index implies that corporates are “taking a wait-and-see approach when it comes to cash deployment, likely because of concerns over political uncertainty at home and abroad.” Indeed, it seems small businesses may not be the only companies in the nation a bit anxious over the presidential election.

A –0.11 shift in Paychex and IHS’ Small Business Jobs Index reveals a slowdown in the growth of small business employment for the U.S. in October, the second month in a row such a trend has been recorded. But no reason to be alarmed: Paychex President and CEO Martin Mucci said the index suggests “moderation” in small business employment levels, with growth still faster than it was in Oct. 2015. “It’s still positive job growth over our index and certainly over the base year, but it has flattened out a bit from June,” he said. “I think there is some cautious concern about the election.”

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