U.S. small business economic outlook remains steady

“Business as usual” climate continues with America’s small businesses, according to latest Visa survey.
Man standing in front of take out counter.

May 17, 2019 – Visa’s proprietary small business health indexes and a nation-wide survey of small business owners indicate a bright outlook for small businesses and small business credit cards. This year started with the government shutdown, trade wars and other economic concerns.  However, small businesses reported stability across all facets of their businesses—no change to their number of employees (four out of five businesses), unchanged expansion plans (two-thirds of small businesses), and no impact from the government shutdown (85 percent of small businesses).

“Small businesses continue to power the economy. While there was some reduction in the number of small businesses expanding, small business conditions remain robust and small businesses continue to forge ahead,” said Wayne Best, Visa Chief Economist.

More highlights:

  • Nearly one-third (28 percent) of small businesses in the U.S. have annual revenues of more than $1 million, while the majority (61 percent) of small business owners have a six-figure household income.
  • Borrowing growth dropped slightly as businesses worked to pay down their debt, with the median unpaid balance decreasing $800 to $4,200. An interest rate hike in December made carrying balances more expensive, while government shutdown fears may have injected some doubt into small business owners’ revenue and economic outlook. Almost a third (30 percent) of small businesses expected to borrow less on their business credit cards, a decline of 4 percent compared to 4Q2018, according to Visa’s recent small business survey.
  • The number of businesses reporting a request for more credit decreased last quarter, down 4 percent since the winter. As small businesses worked to pay down their debt, the charge-off index decreased in late 2018. However, delinquencies continued to climb.
  • At the end of last year, small businesses showed more restraint with their spending. Visa’s Small Business Spending Index reflects this trend, with stability across the last two quarters of 2018.

Visa Small Business Spending Index
Payment volume on Visa business credit cards* (indexed to 1Q2013)

Line chart showing payment volume growth on Visa business credit cards indexed from 1Q2013 to 4Q2018.

Source: Visa data. Last actual: Calendar year 4Q2018.
*Per active account.

Planned small business borrowing in the next three months

Pie chart showing 10% of small businesses plan to borrow more over the next 3 months, 30% plan to borrow less and 60% plan to borrow the same.

Source: Visa quarterly national small business survey of approximately 1000 small business owners, administered by Kelton. Spring survey completed in March 2019.

Disclaimer

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