Small businesses owners ended 2020 with increased optimism, and most expect to recover in 2021 from the economic challenges brought on by the pandemic, according to recent studies from national banks.
One study from Citizens Bank, the Citizens Business Conditions Index, showed that business conditions had improved during the third and fourth quarters of 2020, as optimism about COVID-19 vaccine announcements and increased election certainty began to outweigh concerns about the pandemic, the bank said in a statement.
Citizens Bank uses public information and proprietary corporate data to create the index measuring business conditions across the country. An index value greater than 50 indicates expansion and points to positive business activity for the next quarter.
The U.S. index rose slightly in the fourth quarter to 61.4, up from 61.2 at the end of the third quarter, showing a rebound after the impact of the COVID-19 pandemic had put downward pressure on the index, the bank said.
Business conditions in Massachusetts have typically resulted in lower ratings compared to the U.S. index in recent years, but the state also showed improvements in the third and fourth quarters. The Massachusetts rating was at 51.8 in the fourth quarter and 51.4 in the third quarter, an increase over the second quarter rating of 49.7.
The bank said some sectors continued to fare better than others, with the fourth quarter report showing strength in the financial and energy sectors.
“The fourth quarter was a real turning point. With the vaccine news and a clear outcome for the presidential election, we saw a lot more confidence about the future among business leaders,” Tony Bedikian, head of global markets at Citizens, said in a statement. “The manufacturing sector has been strong and the overall economy has shown resiliency since the middle of the second quarter last year.”
A recent survey from Santander Bank showed that most small business owners believe they have withstood the economic crisis brought on by COVID-19, with 74 percent calling themselves financially resilient.
The online survey by Edelman Data and Intelligence on behalf of Santander Bank included 2,300 U.S. consumers and 500 small business owners. The survey was conducted between Nov. 20 and Dec. 2.
The survey found that small business owners had to adapt during the pandemic, with 59 percent increasing savings, 50 percent delaying a major purchase and 48 percent seeking reliable sources of financial advice. The survey also found that 1 in 10 small business owners considered closing their business due to the pandemic’s disruption, but about 50 percent of small business owners expect their personal finances to improve in 2021.
Some small business owners said the new presidential administration would have positive impacts on their business finances, with 33 percent expecting short-term effects and 39 percent expecting long-term positive results.
The study also found that small businesses still want assistance from banks, including waiving fees (22 percent), flexibility with loan repayment (18 percent) and showing support for local communities. These small businesses could also present lending opportunities for banks, as 29 percent said they would be able to expand hiring with more capital and 28 percent responded that more capital would lead to increased production.
“The pandemic has shown us that banks and other financial institutions must stay nimble – in the same way their own customers have had to stay nimble to adapt to the way this new society works,” Patrick Smith, head of small business banking at Santander Bank, said in a statement. “Small business owners are increasingly looking to us for financial advice, flexibility and a better banking experience – our relationship with small businesses has never been more important.”
