Bankers Take Notice: Small Businesses Deeply Lack Economic Confidence

The majority of small business owners (74%) think the nation’s economic conditions will only get worse, according to the Discover Financial Services Small Business Watch October survey. Specifically, the index, which measures economic confidence among small businesses, dropped 3.2 points in October to 71.4, which is the lowest confidence rating yet.

Ryan Scully, director of Discover’s Business Credit Card says, “As we have seen in previous Watch surveys, events on Wall Street do not necessarily reflect the reality for small businesses. They have little faith that the government knows how to answer the needs of America’s small business owners.”

What this means for bankers is that when they decide to start lending again, they’ll face a small business customer base that is likely to be reluctant to expand and take on additional credit obligations.

And it is not like small business owners see the government as their near-term savior. The majority of small business owners — 69% to be exact — lack confidence in the government’s ability to fix the nation’s economic problems, the survey found. The root of that lack of confidence is evident in the 57% of small business owners surveyed who do not agree with the bailout plan and the 56% who do not believe that the government action can help the economy enough to benefit their business.

Taken in whole, the survey shows a small business community uncertain in the face of a declining economy. The long-term ramifications of this lack of confidence are yet to be seen.