B2B Payments

The Biggest Banking, Regulatory Challenges For Today’s Entrepreneur

National Small Business Week is this week in the U.S., and finance experts are celebrating with new data on the state of the entrepreneurial community. The verdict, overall, is quite good: Small business optimism is, again, at new heights. But analysts from Bank of America, Square, Navcom and the National Association for the Self-Employed warn that challenges for some SMBs have reached new heights, too. This week’s B2B Data Digest is all about small businesses in America, their financial hurdles and their outlook for the future.

Fifty-four percent of small business owners say they are optimistic about the national economy, found Bank of America’s 2018 Business Advantage Small Business Owner Report. The FI said this statistic is two percentage points higher than last year’s report, and a whopping 25 percentage points up from 2016 levels. More than half of small firms also say their local economies are going to improve this year (56 percent), up from 50 percent in the spring of last year, and just 38 percent in 2016. According to Bank of America head of small business Sharon Miller, this marks the highest level of optimism among SMBs since 2015.

Sixty percent of SMBs say revenue will increase this year, Bank of America found, again highlighting the increase in this stat compared to past years. Six in 10 also say they plan to grow their companies over the next five years, while hiring plans among SMBs have bobbed up and down since 2016.

Fifty-two percent of SMBs predict business payments will be digital within the next five years, said Bank of America, while mobile phones are used by nearly all small business owners today – 89 percent say they use smartphones and other mobile devices to manage their business and operations like basic tasks, digital banking and digital payments.

Eighty-three percent of SMBs said they don’t completely understand the new tax law and how it will impact their business, according to the National Association for the Self-Employed. More than 90 percent of survey respondents said they feel the government did not adequately prepare the small business community for the new tax code. Nearly a third said they had spent as much as $499 to prepare for the new tax laws with outside services, though most (55 percent) said they aren’t hiring outside help.

Seventy-five percent of small businesses say they’re concerned about healthcare costs, BofA’s report warned. The percentage of SMBs worried about rising interest rates increased 14 percent year-over-year, while the strength of the U.S. dollar, commodities pricing and the U.S. and global stock markets are also top concerns among entrepreneurs surveyed by the bank.

Seventy-two percent of SMBs told Square they face more challenges today than they did five years ago, according to the FinTech’s Small Business Summary report. While nearly two-thirds say they believe they will meet their five-year goals, more than half (58 percent) noted that increased competition from larger corporates has forced them to step up their game. Nearly half, 49 percent, said cash flow concerns are among their largest worries.

Seventy percent of small firms without a checking account have been denied a loan, found Nav.com in its Annual Business Banking Study. Small business owners without a checking account were also found to be twice as likely to consider closing their business, the majority citing cash flow challenges as the top reason, followed by lack of access to capital.

Fifty-seven percent of entrepreneurs told Nav they prefer big banks, with 57 percent choosing to bank with large providers. Nearly half (47 percent) said they chose their bank because it’s the same institution with which they bank on a personal level. Only 6 percent bank with online banks, while 18 percent use community banks and 15 percent use credit unions.

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