Recently, Are Small Businesses Healthier?

by Debi Enders

Recently, are small businesses healthier?

Every company’s story is unique. But taken altogether, U.S. small businesses are on the upswing, showing stronger sales and improved profitability as 2016 began, according to recent data. The number of small-business startups is on the rise as well.

In businesses with less than $5 million in annual revenue, sales grew by an average of 7.8 percent in 2015, up nearly 1 percent from the previous year, according to Sageworks, a financial information company. Profit margins increased to 7.5 percent—the fourth consecutive year of improvement.  

In addition, the rate of new business startups experienced the biggest year-to-year increase in two decades, reports the Kauffman Foundation—and 80 percent of new entrepreneurs say they are starting businesses because they see opportunity, not because they couldn’t find jobs elsewhere.

So, what does this mean to you?  It means the market for small businesses  is generally strong. Many companies that went into a cost-cutting mode during the recession years are now shifting gears and moving into a solid revenue-generating period.  That is especially true of small businesses that have been proactive about embracing new technologies and business models that make them more customer-friendly and efficient.

If that sounds like your business, there is more good news. Many small businesses are finding that banks are more willing to lend them money to fuel their growth. According to the latest Biz2Credit Small Business Lending Index, larger banks are now approving twice as many small-business loans as they were two years ago. Loan approval rates for small businesses, in fact, are at new post-recession highs.

Again, banks will look at your individual circumstances should you be in the market for financing. But if you’ve been holding back, it may be time to strike while the small-business iron is hot!

Debi Enders (debi.enders@commercebank.com) is
vice president, small business banking at
Commerce Bank.