Finding the right time to apply for a small business loan can sometimes be a Catch-22. On the one hand, owners need to know they’re obtaining the loan during a strong business cycle so they can optimize the funds while consumers are out spending on goods and services. On the other hand, sometimes it’s the poor business environment itself that forces the owner to apply for a loan because nobody is buying anything.
While applying for a small business loan requires owners to gather all their important financial statements and business documents first – which can be a time-consuming process, in and of itself – there are other factors owners should consider before seeking alternative funding. One of the best metrics to use when establishing a good timeline for a business loan is small business owners’ confidence levels.
Strong confidence levels
Using owners’ confidence levels as a determining factor would indicate now is a great time to seek out a small business loan. Currently, business owners are optimistic on their chances for growth through the end of the year. According to a recent Business Confidence Survey by Insperity, Inc, a leading provider of human resources and business performance solutions, 54 percent of small-business owners expect a sales increase in 2015, not much lower than the 58 percent registered in the poll last year. Additionally, 56 percent plan on keeping current staff levels, a 2 percent increase in this category year over year.
“Compared to July 2014, business owners are a bit more conservative operationally, but continue to implement growth plans wherever possible,” Paul J. Sarvadi, Insperity chairman and chief executive officer, said. “The survey results suggest over 50 percent of respondents still expect sales to increase for the remainder of the year – and that remains a positive indicator for near-term economic activity in the small business sector.”
Consumer side
Not only are small business owners confident that sales will be rising through the end of the year, American consumers are also siding with small businesses as well. According to a recent Gallup poll, 67 percent of Americans responded to having “a great deal” or “quite a lot” of confidence in small business. Meanwhile, only 21 percent of respondents felt similarly confident in big business.
This represents a 5 percent uptick from last year and bodes well for this sector of the economy in the coming months. Aside from the military, small businesses remain the only national institution polling above its historical average, going back roughly twenty years. Even during the height of the 2007-2009 financial crisis, small businesses were the one group respondents still felt confident in. While confidence in big business has never been particularly high, it peaked at 34 percent in 1975 and has slowly eroded ever since, only to bottom out in 2009 at 16 percent.
Since small businesses account for a sizable majority of jobs for many Americans, it makes sense they would place their trust in the businesses that employ them or their friends and family. In addition, due to their smaller size, small businesses are more likely to be run by individuals involved and in tune with the needs of the local community, as opposed to big corporations who are run by faceless boards of directors far removed from the day-to-day aspects of everyday life.
With over half of small-business owners confident in the economy moving forward, and an overwhelming majority of American consumers having confidence in the small businesses, now is a great time for owners to take advantage of a small business loan to grow their company.
