Why SMB Optimism Will Likely Carry Over Into 2025

The year 2024 began as a question mark for the smaller firms that are central to Main Street communities and that power the U.S. economy as a whole.

Inflation, of course, remained top of mind — and, yes, that’s a key concern as 2025 takes shape.

But looking back through the year that was, and the signals that are already in place for the current year, there are various reasons why small and medium-sized businesses (SMBs) can and should feel positive about the next several months.

In the PYMNTS Intelligence report “A Good Year: Why SMBs Grew More Confident In 2024,” the data showed that — across a  survey of 573 SMB owners — a few trends emerged. Fewer firms said their revenues were declining as 2024 progressed, and at the end of the year only 15% of companies faced those pressures. That’s quite a bit better than the 23% of firms that had said the same at the beginning of 2024.

More than 50% of SMBs said they had growing revenue, and within that cohort a full third of firms said their revenues had grown by more than 25% through the past year — small wonder, then, that Main Street SMBs had outpaced GDP growth earlier in 2024, an achievement not matched in years. The hotels, restaurants and other hospitality SMBs that are growing were the most likely to expand by more than 10%.

Expansionary plans are among the most indicative signs of optimism. PYMNTS Intelligence found that  more than 70% of those that grew by more than 25% said they increased their marketing and outreach to potential customers.

Companies will, of course, need access to capital to capitalize on those plans. And here is where providers can step in to fill the needs for funding when those needs arise. In the PYMNTS report “Main Street’s Credit Dilemma: Financing Barriers Impede SMBs’ Growth,” separate data noted that found that most SMBs do not have access to credit cards. Just 37% have access to any credit cards, with 32% having access to business credit cards. The rise of various platforms and other options to gain more flexible financing — and even the rise of B2B options to pay for goods (such as inventory) and services over time — can help secure the financial firepower for expansion.

Commentary from recent earnings reports, such as those from Bank of America, underscore business owners’ optimism. Bank of America CEO Brian Moynihan said on the conference call with analysts “in our business banking category … we have the small business bank and we have our Global Commercial Bank, for middle market. Across that environment, the draw rates and lines of credit … are still much lower than they were in pre-pandemic.” He said that after the recent environment of high interest rates “their optimism has changed” as the regulatory environment may be shifting and the uncertainty about the election is now a thing of the past.

“That’s why you’re seeing the optimism come up,” said Moynihan, who added, “We’ve got to translate that optimism into activity, and then you’ll see the loan growth come.”

According to the National Federation of Independent Business (NFIB), the NFIB Small Business Optimism Index was 3.4 points higher in the latest reading to 105.1, ahead of the consensus of about 102 — to a level not seen in years. The net percentage of small business owners expecting the economy to improve rose 16 points from November to a net 52% (seasonally adjusted), the highest since the fourth quarter of 1983, the NFIB said. The percentage of small business owners believing it is a good time to expand their business rose six points to 20% (seasonally adjusted), the highest reading since February 2020.

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