87% of Small Businesses Borrow at Pre-pandemic Rates

According to financial services firm Cargo's latest study, 87% of SMBs continue to show resilience and optimism for their future. The study was released by Cargo Sep. 28, 2022. It shows that 87% are borrowing at the same rate from their financial service providers as before the pandemic. Cargo's latest Heads Up study, which was conducted with Phase 5, found that 49% North American SMBs are optimistic about their business' future.

A survey of 1,300 small-business owners also revealed the importance of trust and consistency when choosing a financial partner. 93% of owners used the same financial service provider most of the time, while 63% used their personal bank to meet their business needs. SMBs also cited "Brand trustworthiness” as a crucial factor in selecting a financial service provider. A small-business owner was interviewed and stated that she needs prompt service from her vendors when there is an issue. This is often when I either fall in love or decide to replace my financial services provider.

According to the study, SMBs place priority on three areas that they require financial services: 1) assistance with daily issues like invoices and payments; 2) timely transfers and confirmation; and 3) setting-up accounts and services.

Small-business owners didn't start their businesses to become accountants, bankers, or payroll specialists. While it is important to keep track of finances, small-business owners look to their financial service providers to help them with this, to make suggestions regarding their businesses, and to treat them as partners rather than just another vendor.

An initial dataset published last Wednesday showed that 44% have less than 3 months cash reserves in case there is an emergency. Only 31% of small businesses said that they are confident they can access capital in an emergency.

Black-owned small businesses face more difficult recovery challenges than their peers. Only 20% of Black-owned small business owners are confident that they will be able access capital, which is 11% lower than their peers. Black-owned small businesses have 51% less cash reserves than their peers, which is 7% more than their peers. Black-owned small businesses anticipate that they will need to borrow money or take out lines of credit in the fall and winter. This is compared to 29% of non-Black business owners.

It has taken a longer time for black-owned small businesses to return to pre-pandemic employment levels. The median number of employees in the universe was 11 before the pandemic. Today, it is 10. The median number of employees in Black-owned small businesses was nine before the pandemic, while the current median number at Black-owned businesses is six.