SMEs Worldwide Feel Seismic Market Changes

Small businesses are feeling the pressures of market changes — and not only in the U.S. Economic fluctuations, regulatory shifts and changes in bank loan behavior across the U.S., U.K., Australia and India offer the latest glimpse into how small and medium-sized businesses are doing. We’ve caught all the data below.

1,093 U.K. SMEs will shut their doors this month, Hudson Weir, a London insolvency firm, said last week. The worst-hit industries? Retail and food-and-drink, with 14.5 percent of SME insolvencies occurring in these sectors. The figures follow earlier analysis about what causes SME insolvency, with researchers concluding that the matter is quite complex (some citing Brexit as a potential problem). All roads lead to one culprit, however: poor cash flow management. According to researchers, the construction industry is the sector most impacted by poor cash flow management.

$2.4 billion less in U.K. small business loans were sent out to borrowers in 2016 compared to a year before, but analysts at Hampshire Trust Bank suggest rising optimism will yield an uptick in bank lending to SMEs. The bank’s SME Growth Watch Report 2016, released in conjunction with the Centre for Economics and Business Research, found that across the U.K.’s 10 major cities, outstanding small business loans declined by 6 percent between Q4 2014 and Q4 2015, with a 12 percent decline in SME lending since Q2 2013. Still, 58 percent of SMEs surveyed said they feel confident about their ability to obtain a loan over the next 12 months.

$567 in interest is missed out by U.K. SMEs because they won’t switch bank accounts, according to new analysis from Cambridge & Counties Bank. Further research from Moneyfacts revealed that interest rate cuts have suppressed the amount of interest an SME can earn in a bank account to 0.41 percent for a business with a balance of about $30,000. For small businesses with less in the bank, interest rates can be as low as 0.1 percent. Cambridge & Counties Bank said the data shows SMEs need to shop around when choosing their financial service provider to find competitive interest rate offers.

50% of companies expect the U.S. economy to improve — a dramatic increase from the 12 percent that said the same in November, researchers at the National Federation of Independent Business said. Their Index of Small Business Optimism spiked by 7.4 points for its December reading, with analysts citing the incoming Trump administration as a major propeller of small business optimism in the nation.

40% of SMEs in Australia will boost staff levels this year, said accounting firm Bentleys in a new report. Plans to up hiring coincide with broader plans for expansion, with the majority of SMEs surveyed by the company reporting optimism for 2017. The most important priority for these business owners is to acquire new customers (49 percent cited this as top-of-mind), while 34 percent highlighted the need to increase revenues this year. Adding new staff will be critical along this growth trajectory, Bentleys said: 39 percent of small businesses and 57 percent of medium-sized businesses will expand staff in the coming months.

2/3 of India SMEs were negatively impacted by demonetization, according to the State Bank of India (SBI). The statistic adds new fuel to the debate over whether SMEs will benefit from last year’s demonetization as India moves towards a cashless economy. According to the SBI, 30 percent of SMEs said their business dropped by half since demonetization; nearly a quarter said their business has declined by as much as 50 percent. Regardless, the report said, 63 percent of SMEs surveyed said they are in favor of demonetization.

5 consecutive months of increases in bank SME loan approval rates mean good news for the nation’s small businesses, said Biz2Credit in its latest Small Business Lending Index, released last week. Analysts at the firm attribute the jumps in SME lending to both the improving economy and the expectations among financial service providers of deregulation amid a new presidential administration. SME loan approval rates at big banks hit 23.9 percent in December; that figure is even larger for small banks at 48.9 percent. Meanwhile, alternative lenders saw yet another decline in SME lending activity, with approval rates down to 58.6 percent from the month prior.