October 2024
Small Business Checkpoint: Lower rates, better business
As credit availability improves, access to loan financing may increase, easing small business credit card pressures.
Key takeaways
- Lingering effects of inflation have continued to cause challenges to cash flow for small businesses, driving higher utilization of credit cards. In Bank of America data, average monthly credit card balances per small business client are up more than 20% compared to 2019 average levels, and average monthly small business credit card utilization rates are approaching a decade level high.
- However, in our view, pressure on credit card usage might ease as credit availability improves and interest rates fall. Additionally, loan payment growth, after being largely negative the past year, is starting to increase and outpace credit card payment growth for small businesses. This further suggests small businesses may be rotating back to bank financing as they anticipate further rate cuts.
- Encouragingly, results from the 2024 Bank of America Women and Minority Business Owner Spotlight provide further evidence that demand for traditional loans and lines of credit is increasing, possibly as they expect further easing while preparing for future expansion.
Read our full analysis for a more in-depth look at these trends.
Small Business Checkpoint is a regular publication from Bank of America Institute. It aims to provide a real-time assessment of small business spending activities and financial well-being, leveraging the depth and breadth of Bank of America’s proprietary data. Such data is not intended to be reflective or indicative of, and should not be relied upon as, the results of operations, financial condition or performance of Bank of America.
