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BFS Capital Blog

2014 Small Business Credit Outlook

December 17, 2013

What’s the economic outlook for 2014? How will small businesses be affected? And what about small businesses’ access to credit? If only we had a crystal ball!

But it seems to depend on where you look for the forecast. Some of the news continues to be mixed, as it has been for some time now. But there are also some unmistakable rays of optimism peeking through the clouds.

The headline in an article pretty much sums it up: “The sky’s the limit. Sort of.” Contributor Kimberly Weisul says CEOs of the “Inc. 5000” are bullish on next year. In a recent survey, 37 percent said their business prospects are “excellent,” while another 45 percent said their prospects are “good”—a big change from just a year or two ago. The best news: Most are big on expansion. Eighty percent said they plan to grow head count, as well as increase the products and services they offer.

But while the optimism and opportunity battle cry is rising, there are still worries. Most say things look good only if Washington cleans up its circus act! Not a small order. Specific worries:

    • Washington gridlock


    • The possible effects of the Affordable Care Act


    • Fluctuating consumer confidence and spending

So the broader perspective among business owners is less upbeat. The NFIB (National Federation of Independent Business) cites survey results in which 62 percent of CEOs said that it’s not a good time to expand. For a lot of businesses, growth and recovery just haven’t been steady and consistent.

Benefits specialists Zane Benefits echo some of these sentiments and cite research that says while small and mid-sized business owners are more optimistic in their outlooks for 2014, they’re still exercising caution in terms of actual spending. Their number one concern? No surprise here: Health insurance.

But what about access to credit? In good times and bad, credit is a key determinant in businesses’ ability to survive and grow. Weisul calls access to credit “a sore point” among fast-growth companies and says it was getting steadily better until the government shutdown, which will depress SBA year-end numbers for 2013. Even so, SBA says loan volume in 2013 was up 15 percent from 2012. And delinquencies and past-dues among business loans have been steadily declining.

Even so, it’s hard to see banks rushing back into the small-business-lending space in a big way. And even when they’re willing to lend to smaller businesses, the requirements tend to be so stringent that few “typical” small businesses can meet them—or can afford to wait for weeks or months to get funding.

That’s why so-called “alternative” (non-bank) business lenders like Business Financial Services continue to be the go-to source for capital for growing numbers of small and mid-sized businesses. Providing “access to credit” is what we do, helping growing businesses in all 50 U.S. states leverage opportunities and meet operating challenges with financing from our business loans.

From where we sit, businesses are increasingly using our financing to expand and take advantage of opportunities that propel them forward. This implies a growing optimism, which we believe will continue to grow in 2014.

Many in the Inc. survey say they’re continuing to expand but keeping an eye on Washington antics at the same time. Fundamentally, this article says, the outlook is “pretty darn good,” and forecasts are that economic growth will pick up. Which can only be good news for business owners everywhere.
Image courtesy of Salvatore Vuono /