Small businesses increasingly worried about raising capital.

Small business owners’ perception of their access to capital has weakened over the past five years, a trend revealed in the latest MetLife and US Chamber Small Business Index. Of the small business owners surveyed, only 49% reported good access to capital or loans, a decline from 54% in Q2 2023 and 67% in Q2 2017. The data also indicates that small business owners are increasingly relying on personal savings to fund their businesses, with 69% citing personal savings as their primary source of financing. This represents a marked increase compared to 60% in Q2 2023 and 43% in Q1 2023.

Moreover, the survey highlights a gendered dimension to the trend, with women-owned small businesses more likely to depend on personal savings than those owned by men, with 74% of female-owned businesses saying they turn to personal savings, compared to 66% owned by men. Similarly, the survey found that small businesses with fewer than five employees were also more likely to use personal savings to finance their businesses.

The survey identified three main barriers to financing for small businesses: a time-consuming application process (52%), insufficient information on available sources of capital (46%), and inadequate revenue or assets to qualify for a loan (46%). Larger small businesses with 20-500 employees were found to have better access to capital, with 73% reporting good access compared to 55% of those with 5-19 employees and 41% of those with fewer than five employees.

Against this backdrop, the index’s overall score dropped slightly from 62.1 in Q4 to 60 in Q1 2023, highlighting small business owners’ weakening outlook on the national economy. Only 20% of those surveyed said they considered the US economy to be in good health, down from 27% in the previous quarter. The SBI survey was conducted between January 16 and February 2, 2023. For more information on the findings of the survey, visit https://www.uschamber.com/sbindex/.

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