Small business owners are collectively breathing a sigh of relief over the Federal Reserve’s widely expected decision to cut interest rates last week, and new data shows business owners expect to put increased capital into action.
CNBC and SurveyMonkey Small Business Survey Q3 It found that owners said lower interest rates would lead them to increase investments, expand their business, or increase inventory. The survey was conducted Sept. 3-9, before a Federal Reserve meeting where interest rates were expected to be cut, among a national sample of 2,276 self-identified small business owners ages 18 and older online.
Main Street has been watching interest rates closely. Data from the National Federation of Independent Business, a small business lobby group, found that interest rates on short-term loans were 9.5% in August of this year, up from 7.6% in January of 2023. Additionally, 60% of owners said they They are not interested in borrowing at the moment, partly because interest rates are high.
Lower rates can free up resources for owners to allocate to other areas of their business, including remaining competitive when hiring, according to Holly Wade, director of the NFIB Research Center.
“That will be very helpful for them to see if they can’t be more competitive in this area in terms of wages and benefits and alleviate some of the cost pressures that they’ve been dealing with for the last three years or so.” Wade told CNBC in an interview.
Inflation is closely linked to interest rates. One in three small business owners in the CNBC and SurveyMonkey poll believe inflation has peaked, up 9 points from last quarter’s reading of 24 percent. But two-thirds still believe it will continue to rise despite optimism about easing inflation, which has reached its highest level since CNBC and SurveyMonkey began asking this question, and is the highest reading this year. However, business owners remain cautious, with 38 percent saying inflation is the biggest risk to their business, nearly three times as much as the next biggest risks, which are consumer demand and interest rates.
Additionally, overall confidence in the quarterly CNBC/SurveyMonkey poll rose to 51 out of 100. That’s up four points from last quarter and nine points from the same quarter last year, and marks the first time during a Biden presidency that confidence has risen above 50. , Read “Pure and confident.”
