Credit Access Could Determine Small Business Success in 2025

Conditions are improving for small businesses, at least with the uncertainty of the election behind them and a generally positive mindset about fundamentals ahead of them.

However, access to credit, and in some cases the lack thereof, may determine whether these mainstays of the United States economy can capitalize on strategic opportunities to expand.

The November PYMNTS Intelligence report “Main Street’s Credit Dilemma: Financing Barriers Impede SMBs’ Growth” found that most small- to medium-sized businesses (SMBs) do not have access to credit cards. Just 37% have access to any credit cards, with 32% having access to business credit cards. In other words, roughly 5% of Main Street SMBs must rely exclusively on personal credit cards to fund their business.

Among firms generating $1 million or more in revenue annually, nearly half have access to credit cards, the report revealed. Conversely, just 25% of those with annual revenues of $150,000 or less said the same. When credit is on tap, cards are used by SMBs for necessity and strategic purposes roughly equally.

Looking Ahead

Strategy and growth will likely be top of mind for SMBs in the first few weeks of the new year, given that they are generally sanguine about their prospects in the months ahead.

Confidence among small businesses jumped last month to a level not seen in six years, according to a Tuesday (Jan. 14) press release from the National Federation of Independent Business (NFIB). The NFIB Small Business Optimism Index was 3.4 points higher in the latest reading to 105.1, ahead of the consensus of about 102.

“Optimism on Main Street continues to grow with the improved economic outlook following the election,” NFIB Chief Economist Bill Dunkelberg said in the release. “Small business owners feel more certain and hopeful about the economic agenda of the new administration. Expectations for economic growth, lower inflation and positive business conditions have increased in anticipation of pro-business policies and legislation in the new year.”

The net percentage of small business owners expecting the economy to improve rose 16 points from November to a net 52% (seasonally adjusted), the highest since the fourth quarter of 1983, per the release. The percentage of small business owners believing it is a good time to expand their business rose six points to 20% (seasonally adjusted), the highest reading since February 2020.

Lingering Concerns

However, inflation and satisfying labor requirements remain key concerns for SMBs. More than half of business owners who have been actively hiring said there was a dearth of qualified applicants, according to the release.

Meanwhile, the PYMNTS Intelligence report “No-Wait Wages: Leveraging Instant Payments to Boost Employee Satisfaction” found that flexibility with paying out wages as they are earned can be a competitive advantage for firms.

The report revealed that 83% of individuals want to have more frequent pay schedules, and 75% of millennials said earned wage access availability would influence their acceptance of a job offer. Additionally, 96% of corporates that offered earned wage access said their employees liked it and the offering helped attract the talent and labor they needed.

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