Economic Data
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Summary & Highlights

Index up as Small Businesses Plan for More Hiring, Higher Revenue

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Small businesses are feeling better about the future according to the latest MetLife & U.S. Chamber of Commerce Small Business Index. Both hiring plans and revenue expectations for the next year reached the highest level ever recorded in the Index (started in Q2 2017), driving the overall score higher.

The Index rose to 63.1 this quarter, a slight increase from last quarter (60.0) and near findings in Q4 2022 (62.1). Overall, small businesses continue to feel good about the day-to-day operations of their business, including business health and cash flow, despite continued macroeconomic mixed signals.

However, most small business owners continue to see inflation as their biggest challenge by far. More than half (54%) of small business owners say inflation is their top challenge. This has remained consistent since Q3 2022 and represents a 35-percentage point increase since Q3 2021. This sentiment is widespread, and inflation is the top concern for small businesses regardless of their region, number of employees, or sector.

54%
of small business owners say inflation is their top challenge
54%
of small business owners say inflation is their top challenge
Gauge showing 63.1 for the Small Business Index
Q2 2023 SBI:63.1
The MetLife and U.S. Chamber of Commerce Small Business Index score for Q2 is 63.1. The Index score for Q1 was 60.0.

Small businesses say they are changing their behavior in response to interest rate hikes and have more concern about rising rates. Three in four (76%) small businesses say rising interest rates are limiting their ability to raise capital or financing for their business, a 10-percentage point increase since last quarter and a 16-percentage point increase since first asked one year ago. What’s more, half (50%) of small businesses report that they have delayed plans to grow their business in response to higher interest rates. Fully 74% of small businesses express concern about rising interest rates making it harder to pay back their current business loans (while 36% say they strongly feel rising rates will make it harder to pay them back). Seventy three percent (73%) say it’s harder to borrow money from banks for their business because banks are tightening lines of credit.

Small business owners also indicate that they are turning to more sources for capital/financing for their business. A majority report relying on their personal savings (71%), credit cards (67%), and local banks or credit unions (59%) for funding. Four in 10 (41%) small businesses say they have turned to fixed rate loans while 26% say they have used variable rate loans.

76%
of small businesses say rising interest rates are limiting their ability to raise capital or financing for their business, a 10-percentage point increase since last quarter.
76%
of small businesses say rising interest rates are limiting their ability to raise capital or financing for their business, a 10-percentage point increase since last quarter.

Small Business Index Score 2019 Q3 - 2023 Q2

Small Business Index Score 2019 Q3 - 2023 Q2 line graph
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Index Highlights

The MetLife and U.S. Chamber of Commerce Small Business Index score for Q2 is 63.1. The Index score for Q1 was 60.0.

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Index score heads higher.

The MetLife & U.S. Chamber of Commerce Small Business Index rose slightly to 63.1 from 60.0 last quarter. This is near findings in Q4 2022 (62.1).
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Hiring plans reach record highs.

Hiring expectations reached the highest ever recorded for the Index (started Q2 2017). Nearly half (47%) of small businesses report that they anticipate increasing staff in the next year, up 10 percentage points since last quarter.
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Revenue expectations reach record highs.

Revenue expectations reached the highest ever recorded for the Index (started Q2 2017). 71% of small businesses say they expect next year’s revenue to increase, up by seven percentage points since Q1 2023.
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Inflation remains the top challenge.

A majority (54%) of small businesses rate inflation as their largest challenge. This represents a 35-percentage point increase since Q3 2021 and marks the sixth consecutive quarter that inflation tops the list of challenges.
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Small businesses are more likely to say competition has increased.

36% of small businesses say competition has increased compared to six months ago, a nine-percentage point jump from Q1 2023 (27%).
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Rising interest rates are limiting the ability to raise capital.

Three in four (76%) small businesses say that rising interest rates are limiting their ability to raise capital, a 10-percentage point increase since Q1 and a 16-point increase since Q2 2022.
Learn more
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More see rising interest rates as top challenge.

23% of small business owners say rising interest rates are the top challenge facing the small business community, increasing by seven percentage points since last quarter (was 16%).
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Small businesses turn to more sources for financing.

As inflation persists and concerns around interest rates grow, more small businesses report turning to multiple sources of funding compared to a year ago, particularly personal savings, friends, and family.
Learn more
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Small businesses put growth plans on hold in response to rising rates.

In response to higher interest rates, half (50%) of small businesses report that they have delayed plans to grow their business.
Learn more
#

Index score heads higher.

The MetLife & U.S. Chamber of Commerce Small Business Index rose slightly to 63.1 from 60.0 last quarter. This is near findings in Q4 2022 (62.1).
Learn more
#

Hiring plans reach record highs.

Hiring expectations reached the highest ever recorded for the Index (started Q2 2017). Nearly half (47%) of small businesses report that they anticipate increasing staff in the next year, up 10 percentage points since last quarter.
Learn more
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Revenue expectations reach record highs.

Revenue expectations reached the highest ever recorded for the Index (started Q2 2017). 71% of small businesses say they expect next year’s revenue to increase, up by seven percentage points since Q1 2023.
Learn more
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Inflation remains the top challenge.

A majority (54%) of small businesses rate inflation as their largest challenge. This represents a 35-percentage point increase since Q3 2021 and marks the sixth consecutive quarter that inflation tops the list of challenges.
Learn more
#

Small businesses are more likely to say competition has increased.

36% of small businesses say competition has increased compared to six months ago, a nine-percentage point jump from Q1 2023 (27%).
Learn more
#

Rising interest rates are limiting the ability to raise capital.

Three in four (76%) small businesses say that rising interest rates are limiting their ability to raise capital, a 10-percentage point increase since Q1 and a 16-point increase since Q2 2022.
Learn more
#

More see rising interest rates as top challenge.

23% of small business owners say rising interest rates are the top challenge facing the small business community, increasing by seven percentage points since last quarter (was 16%).
Learn more
#

Small businesses turn to more sources for financing.

As inflation persists and concerns around interest rates grow, more small businesses report turning to multiple sources of funding compared to a year ago, particularly personal savings, friends, and family.
Learn more
#

Small businesses put growth plans on hold in response to rising rates.

In response to higher interest rates, half (50%) of small businesses report that they have delayed plans to grow their business.
Learn more