Small-business optimism is at its highest point in five years and trending upward, and a major driver is business owner optimism about the availability of credit, according to a nationwide Wells Fargo/Gallup Small Business Index survey.
However, at 25, the index remains well below the 90-plus levels reached before the last recession began at the end of 2007. According to the telephone survey of 602 small-business owners in 50 states, conducted from July 22 to 26, the index is up 9 points since the second quarter of 2013, and is 36 points higher than the fourth quarter of 2012, when it was in negative territory.
Small-business owners report being more optimistic about their ability to access credit over the next year and a majority — 57 percent — said they have seen an overall improvement in the housing market in their area.
John Cole, Wells Fargo Northeast business banking division manager, who is based in Summit, said the survey results are trends are on par with what’s going on in New Jersey. The survey found 30 percent of businesses expect credit to be difficult to obtain in the next 12 months, down from 36 percent in the second quarter of 2013, and the lowest in five years.
“More businesses are optimistic about gaining access to credit, and that’s very consistent with the experience we’re having in our New Jersey lending,” Cole said.
“Our loan pipeline to small business is way up in 2013 from where we started the year; the pace at which we are producing new loans this year is up double digits over last year,” he said.
And, Cole said, “just anecdotally, the business owners that I’m talking to out in the marketplace are feeling better, and that is a great sign for everybody in New Jersey.”
Cole, who oversees the $2 million to $20 million business banking segment, said he has 45 bankers working in the New Jersey market, and he is planning to hire more in 2014.
“I don’t know the exact number I will add, but we are committed to adding” bankers next year, he said.
Cole said it is significant that 57 percent of business owners have seen an improvement in their local housing market.
“When you see improvement in the housing market, that often supports ancillary businesses that support housing,” he said. And a critical barometer is the improved business sentiment about credit availability: “As small-business owners feel good about their chances to obtain credit from lenders, they are more likely to invest and grow their businesses, and I think that’s also driving some of this optimism.”
In New Jersey, no one sector is leading the way, Cole said. “New Jersey is a very diversified business market. Many, many industries are represented here, and the diversification of New Jersey is one of the things that makes it strong.”
Reporter Beth Fitzgerald is @BethFitzgerald8 on Twitter.