Small-Business Owners Project Less Need for Credit: Wells Fargo | Weatherhead

Small-Business Owners Project Less Need for Credit: Wells Fargo

Posted 12.9.2015

Scott Shane, PhDScott Shane, PhD, A. Malachi Mixon III Professor of Entrepreneurial Studies, contributed to American Banker's article about small-business owners' financial situation and borrowing in upcoming quarters.

In "Small-Business Owners Project Less Need for Credit: Wells Fargo," Jacob Passy cites a recent survey conducted by Wells Fargo and Gallup that found dwindling optimism surrounding the economy among small-business owners.

"Things are so weak that small businesses are not interested in buying anything new," said Shane.

"That's a canary in a coal mine that tells us there won't be much small-business activity in the future," Shane said.

The article indicates that about 39% of respondents felt a rate increase would negatively impact their business. Shane credits this to the high rates owners are already paying, particularly to alternative lenders.

"Because small businesses are borrowing at a much higher interest rate, the interest rate they pay may not be very directly related to the Fed rate, or there may be a lag or so much of a cushion that it doesn't matter," Shane said.

Read the full article on American Banker.

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