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Hiring Pains, Revenue Optimism Hit Small Business Week

In honor of Small Business (SMB) Week, which kicks off in the U.S. on Monday (May 6), banks and financial service providers are releasing troves of new data on how small businesses are managing money and preparing for growth. There is much to be optimistic about: Entrepreneurs and small business owners are anticipating growth this year, and have much optimism about the future.

Yet, steps to achieve that growth may be difficult, considering the low unemployment and tight labor market, threats of cyberattacks and a continued sentiment that traditional bank financing simply isn’t cutting it for the small business owner. Below, PYMNTS breaks down some of the most important data points from a range of research reports on the state of the U.S. small business.

Sixty-nine percent of small business owners anticipate a recession, new Bank of America research revealed. Of them, just 19 percent have opened a line of credit, a figure that causes concern for Bank of America Head of Small Business Sharon Miller, who said the data point is “too low,” Reuters reported last week. These companies are taking steps to prepare for an upcoming recession by figuring out ways to reduce expenses and hold onto cash, Bank of America researchers found.

Fifty-four percent of small firms surveyed by TD Bank expect revenue to increase, a 2 percent increase from this time last year, the bank said. Its “2019 Small Business Survey” found that 46 percent are looking to expand product lines, with 39 percent planning to grow production this year. Forty-three percent plan to seek credit. Despite the optimism, 64 percent revealed they did not benefit from recent tax reform, and more than one-third are concerned about the health of the national economy. Though 23 percent want to grow their staff this year, separate research suggested they could have a difficult time doing so.

Thirty-two percent of U.S. SMBs turned to online lenders when seeking funding in 2018, the latest analysis from Funding Circle and Oxford Economics found. That’s up from 19 percent just two years prior, analysts noted, though it is important to realize that the report was sponsored by one of those online lenders. Overall, the “Big Business of Small Business” report concluded that big banks are neglecting the SMB community when it comes to addressing their need for funding.

The 3.6 percent unemployment rate is taking its toll on small businesses, which continue to struggle in hiring adequate talent and promoting growth, according to recent analysis from the National Federation of Independent Business. The low unemployment rate is also pressuring SMBs to retain the staff they do have. Sixty percent of surveyed small businesses said they are trying to hire new employees, but 54 percent have yet to find qualified applicants for open positions. More than one-fifth said this struggle in hiring is now their biggest problem related to running a business.

Fifty-five percent of small business owners said they’d pay to get their data back in the event of a ransomware attack. In a new report from AppRiver, researchers found that small businesses with fewer than 250 employees would pay to regain control of their data. When examining larger SMBs (those with between 150 and 250 employees), that willingness to pay was even higher. Nearly half of the companies surveyed said they know that confidential business data is currently stored across various locations and devices.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 Pay Advances: The Gig Economy’s New Normal, a PYMNTS and Mastercard collaboration, examines pay advances – full or partial payments received before an ad hoc job is completed – including how gig workers currently use them and their potential for future adoption.

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