Amid Fed interest rate cuts, small business owners become more optimistic: CNBC survey

• After the Fed's decision to lower interest rates, small business owners anticipate investing more capital, according to new polling data.
• According to CNBC and SurveyMonkey's Small Business Survey for Q3, owners stated that lower interest rates would encourage them to boost their investments, expand their business, or increase their inventory.
• Despite a 9-point increase in the belief that inflation has peaked among small business owners, cost concerns remain prevalent in the community, according to a survey.

The Federal Reserve's decision to cut interest rates last week has brought relief to small business owners, and new data indicate they plan to use the additional capital.

According to CNBC and SurveyMonkey's Small Business Survey for Q3, lower interest rates will encourage small business owners to increase investments, expand their business, or increase inventory. The poll was conducted September 3-9, before the Fed meeting where a rate cut was anticipated, among a national sample of 2,276 self-identified small business owners ages 18 and up online.

The National Federation of Independent Business reported that interest rates on short maturity loans increased from 7.6% in January 2023 to 9.5% in August 2023. Additionally, 60% of owners stated that they were not interested in borrowing at this time due to the high rates.

According to Holly Wade, director of the NFIB's Research Center, lower rates can enable business owners to allocate resources to other areas, such as remaining competitive on hiring.

Wade stated in an interview with CNBC that it would be advantageous for them to assess their competitiveness in the wage and benefit space and alleviate some of the cost pressures they've faced for the past three years.

Inflation is closely tied to interest rates. According to a survey by CNBC and SurveyMonkey, one in three small business owners believes that inflation has peaked, up 9 points from the previous quarter's 24 percent reading. However, two-thirds of the respondents still believe that inflation will continue to rise, despite optimism for inflation relief hitting its highest level since the survey began asking that question, and the highest reading this year. Despite this, owners are cautious, with 38 percent citing inflation as the biggest risk to their business, nearly three times higher than the next biggest risks, consumer demand and interest rates.

The quarterly CNBC/SurveyMonkey poll saw a four-point increase in overall confidence to 51 out of 100, marking a nine-point jump from the same quarter last year and the first time during the Biden presidency that it has surpassed 50, a "net confident" reading.