The latest report from OnDeck and Ocrolus highlights a significant rise in optimism among small businesses on Main Street as they navigate through the macroeconomic environment. The Q1 2024 report, which is based on survey responses from 422 small businesses and cash flow data from over 1.9 million small business applications, indicates that small businesses are increasingly positive about future growth prospects and are effectively managing challenges related to inflation and cash flow.
There are some interesting statistics about their cashflow and credit habits so let's get into the key points I picked from the report.
40% of small businesses that have been in operation for over 20 years reported they were denied a loan from a big bank.
Nearly all small businesses had annual revenues under $10M.
Over a third of small businesses (34%) who applied for a loan from a bank reported that the application process was too difficult.
72% of small business owners report having cash on hand to cover up to two months of operating expenses
Payroll as a percentage of revenue was 19.5% in Q1 2024 — a year-over-year increase from 18.5% in Q1 2023.
34% of the surveyed businesses preferred non-bank alternative lenders, noting the speed, ease, and flexible financing terms they provide.
Small businesses are concerned about the trailing impact of inflation on their operating expenses, with margins starting to improve after having absorbed cost increases in many areas — supplies, transportation, equipment, and even utilities. However, they have been able to turn to experienced specialty lenders to fill the gaps in the capital needs, as evidenced by application rates.
Survey shows that 70% of small businesses have less than four months of operating cash
Of the tactics they use to ensure they can pay their bills and invest in growth, the number one tactic is a business line of credit
In a landscape where economic uncertainty looms large, small businesses on Main Street are demonstrating remarkable resilience and adaptability. The Q1 2024 report from OnDeck and Ocrolus reveals a groundswell of optimism among these businesses.
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