Small Businesses Eye Inflation as Top Concern

Inflation is top of mind for the small businesses that power Main Street and the U.S. economy at large.

Small business optimism hit its lowest level in more than a decade, according to a survey from the National Federation of Independent Businesses.

“The small business sector is showing signs of a potential slowdown in economic activity,” the NFIB said.

The data, released Tuesday (April 9), showed that the latest NFIB Small Business Optimism Index reading was 88.5 in March, down 0.9 of a point from the February reading. The index touched the lowest level seen since December 2012.

“Small business optimism has reached the lowest level since 2012 as owners continue to manage numerous economic headwinds,” said NFIB Chief Economist Bill Dunkelberg in a statement that accompanied the report. “Inflation has once again been reported as the top business problem on Main Street and the labor market has only eased slightly.”

Inflation Is Top of Mind

The NFIB estimated that 25% of small business owners reported that inflation was their single most important problem, fueled by higher input and labor costs. That’s two percentage points higher than the February reading.

In a nod to the labor market itself, the business owners surveyed said that, per the NFIB, “plans to fill open positions continue to slow,” as a net 11% of owners said they had planned to create new jobs through the next three months, which is a percentage point lower than had been seen in the prior month — and the lowest level since the pandemic was in full swing, in May 2020.

With the increased input costs and with wages a key way to keep staff on hand, it’s no surprise that even with a subdued outlook, small businesses would look to funding as a way to smooth operating pressures.

The Lending Landscape

But, as PYMNTS Intelligence found, one-third of Main Street business owners surveyed said loan costs remained a concern in 2024. Ninety percent of small- to medium-sized businesses (SMBs) used at least one type of borrowing tool in the last year. Revolving credit products — such as credit cards and lines of credit — have been the most widely used option, embraced by 73% of SMBs.

Separate PYMNTS Intelligence research found that at the midpoint of last year, only 47% of SMBs generating annual revenues of $10 million or less reported having access to business or personal financing as of July.