Unprecedented is probably a word most of us can live without hearing again, especially following the pandemic. However, with the roller coaster of events in 2023, it is a pretty fitting word to describe the year we’re just closing out. In the spring, we watched several banks collapse. The Fed met throughout the year, raising interest rates a total of four times, as of this article’s publishing. Our nation narrowly avoided exceeding our debt ceiling. A lot has been discussed about the impact of all of this on Wall Street, but what about Main Street?
Small businesses account for 99% of companies in America. In fact, we saw a small business boom leading into 2023, with a record number of businesses — over 10 million — opening their doors between 2021 and 2022. However, we know the small businesses that line your community’s streets, operate out of garages and fill the pages of sites like Etsy, are not exempt from the pressures of the Fed, debt ceilings and interest rate increases. Here’s what we’ve learned — or had reaffirmed for us — about small businesses in 2023.
The Entrepreneurial Spirit Can’t Be Tamped Down
Perhaps unsurprisingly, the U.S. ranks No. 1 as the most entrepreneurial country in the world, according to U.S. News and World Report. Entrepreneurs thrive in problem-solving and innovation, despite — or even in light of — hard times. Entrepreneurship increased during the Great Recession, when unemployment was rampant and the stock market hit lows not seen in many years.
This means small business owners — those that exist today and those that are still in the wings brewing up their idea — can’t be tamped down. The U.S. Chamber of Commerce published an interactive map that shows the growth of new business applications by state between July 2022 and July 2023, confirming that ingenuity is alive and well.
The Government is Doubling Down on Small Business Lending
In May, the Biden Administration announced, in conjunction with the Small Business Administration (SBA), new rules and programs aimed at streamlining determining eligibility for SBA loans, like the popular 7(a) and 504 loans, as well as advancements for the Community Advantage Pilot Program. What’s more is that, this fall, the SBA also announced it has chosen three new lenders to make SBA 7(a) loans available nationally. This stands out because it’s the first time in four decades that the SBA has expanded this program, upping the number of non-bank lenders to 17.
The expansion to the SBA loan programs couldn’t have come at a more critical time. Capital for small businesses matters now more than ever. The U.S. Senate Committee on Small Business & Entrepreneurship summarizes it perfectly: “Capital is the lifeblood of any businesses, but especially small businesses.” Goldman Sachs reported in September that, of the small business owners it surveyed who had applied for some type of funding, 70% said it was difficult to access that capital.
Small Businesses Make Life Better
Don’t take just my word for it. A recent Gallup poll found that 85% of Americans report small businesses making a somewhat or extremely positive impact on people’s lives. When fires devastated the beautiful island of Maui earlier this summer, small businesses rallied and showed up to support the community. For example, L&L Hawaiian Barbecue donated $1 for every mobile app order to the Maui recovery efforts. Manoa Chocolate committed its net proceeds from the sales of its Hawaiian sea salt dark chocolate to the recovery efforts.
In return, people across the country, even thousands of miles away, showed up to help these businesses. With the island’s economy struggling following the fire, consumers flocked to social media to share ideas on how to help these local businesses. #MauiStrong was trending on social media, for very good reason.
As we close out 2023, I continue to be impressed by the small businesses that fuel our local communities, serve as the bedrock in our economy and persist in innovation. I can’t wait to see what 2024 holds.