Ways small businesses can navigate funding roadblocks

According to Bank of America, the number of small businesses planning to expand and obtain funding has decreased since last year. Just like consumers, small businesses are feeling the impacts from inflation, geopolitical tensions, and more.

Small Business & Entrepreneurship Council CEO and President Karen Kerrigan and Hello Alice Co-founder and President Elizabeth Gore join Yahoo Finance for its Small Business, Big Opportunities special to help small business owners understand what pitfalls to avoid when seeking capital for their business.

Gore gives advice by reminding owners: "The number one thing that small business owners need to do is ensure their financial fitness is correct. Are your books in order? Do you have a strong business plan before you ever go out and seek capital?"

Kerrigan outlines some of the top concerns for small business owners: "There are concerns about crime, depending on sort of where they are... as well as their concerns about foreign policy and what's happening on the international front, sort of the geopolitical, tensions and concerns that are out there and how, something could happen overnight, and affect supply chains, cost, and etc."

She continues: "I would say the other big issue is what's happening in Washington from a tax and a regulatory perspective. They do see a lot of things in the regulatory agencies. The Department of Labor, the FTC (Federal Trade Commission), and other agencies and how those regulations are going to impact the cost of capital, their opportunity to use independent contractors."

For more expert insight and the latest market action, click here to watch this full episode.

This post was written by Nicholas Jacobino

Video Transcript

The number of small business is planning to expand and obtain funding has decreased since last spring.

That's according to Bank of America.

And this comes as concerns over the uncertain economic landscape linger for business owners as part of Yahoo finance is small business, big opportunities.

We are tapping into ways to enable small businesses growth.

Karen Carrigan, small business and entrepreneurship council CEO and president along with hello, Alice, co founder and President Elizabeth Gore are joining us now to discuss.

So, ladies first of all, thank you so much for being here.

Appreciate it.

Um Karen, I wanna start with you.

Can you talk to us a little bit more about that backdrop before we dig into how to help small business, I'm just curious to kind of take the temperature on how business owners that you're speaking to are feeling right now uh amidst this economic environment.

Well, they, they're definitely naga navigating uh challenges that have been in existence, you know, for some time and, and yeah, the inflation continues to be their number one concern.

Um uh and inflationary pressures that's definitely squeezing uh squeezing their bottom line and um and, and they're also putting a dent into, into their competence as well.

There has been a pull back, you know, on consumer activity.

So all that, um you know, really is, is quite challenging.

Um, you know, on the other hand, you know, when we talk to business owners, you know, they, they see the challenge and they're pivoting and they're turning to technology and using A I and a bunch of other tools to help them navigate through this.

So where there are challenges.

They theyre they're also, you know, they're, they're seeing solutions and, and really grinding their way through it.

Elizabeth, I wanna bring you in here as well and maybe start there as well.

Elizabeth, big picture.

You know, you're talking to small business owners across this country.

How, how are they doing?

How are they feeling right now, Elizabeth.

Oh, how do y'all?

We are?

I gotta tell you we start 1.5 million small businesses on Hello, Alice.

And they are being very reserved and conservative right now as they should be.

Capital is expensive.

We've got a little bit of a slowdown, but I also think they're incredibly resilient.

They are being smart about their cash flow.

We are not ever going back to pre COVID times when small business owners over index on credit and loans, they're gonna be smart until consumer spending picks back up again.

And listen, we have five times the amount of small businesses launching in the US right now.

Than we ever have.

So, while there's a conservative approach to cash flow right now, I think there's a sense of optimism on these small business owners following their dreams.

Well, that's helpful to know, especially on the credit front, Elizabeth.

I, I wanna stick with you here.

What is the number one question that you get, or that people come to you that they want help with when they're either starting or, you know, having fledgling business.

I think that, you know, the number one thing we hear all the time is equitable access to capital and I, I use the word ex equitable because anyone can get capital.

But how expensive is it right now?

And I think small business owners are getting more savvy about understanding how expensive is the capital that they are accessing?

So, should I go for operational credit?

Should I get an SB a loan?

Should I really think about getting that line of credit for the first time?

They're just being smarter about it.

But the number one thing that small business owners need to do is ensure their financial fitness is correct.

Are your books in order?

Do you have a strong business plan before you ever go out and seek capital?

Karen?

Uh You know, when you're talking small business owners, what I what is top of mind there?

Are, are you hearing what Elizabeth is hearing in terms of access to capital or what, what are the big trends and themes, you know, is it jobs supply chain inflation.

What are you hearing?

Well, it's sort of a combination of, of, of all of that, right?

I mean, you know, as I mentioned, sort of the cost, the inflationary pressures, I mean, that's the big issue that we continue to hear as well as um a tightening, you know, of capital and an access to capital and the cost of capital, you know, is getting higher.

You know, there are others, there are some other issues that we see emerging as well.

You know, there can concerns about crime, you know, depending on sort of where they are, you know, where their business happens to be located, that is, that is tick higher as well as their concerns about, you know, foreign policy and what's happening on the international front, sort of the geopolitical, um you know, tensions and, and concerns that are out there and how, you know, something could happen overnight, you know, and affect supply chains cost.

Um and et cetera, I would say the other big issue is what's happening in Washington from a, from a tax in a regulatory perspective.

They do see a lot of things in the regulatory agencies, the Department of Labor, the FTC, um and other agencies and how those regulations are going to impact the cost of capital, their avail availability or opportunities, independent contractors.

And then there's, there's taxing issues lingering too as well.

There's a lot of expired uh tax credits.

Uh There's ones that will be expiring uh in the near future with regard to uh the 20% business deduction and they're concerned about where that is going to go and whether they're going to have less resources, you know, in their business.

So there are those type of policy uncertainties and issues that we are hearing much more.

Um, and Elizabeth, I wanna pick up on one thing that Karen said and that's about cost of capital.

I'm curious to get your take on, you know, we spend all day long talking about big public companies and their accessibility, you know how they get capital and what's happening with interest rates.

What are we seeing on the small business side on that front?

Capital is very expensive right now and the irony is those two are very connected.

So interestingly, I talk to banks every day and I pushed them really hard to think of creative ways to get capital in the hands of small business owners in a cheaper way again with five times the amount launching right now.

To me that it's a great market.

I think larger fintech are catching up.

If you look at what square and Nerdwallet and others are doing to get capital in the hands of small businesses, I think they're being more innovative than the banks.

However, if it's expensive for banks, it's expensive for small business owners.

So we really have to watch that and think about it.

Elizabeth Karen.

Thank you both so much for joining the show today.

We appreciate it.

Thank you.