Despite inflation continuing, Main Street is more optimistic this year, according to a survey.

• According to a survey by Goldman Sachs 10,000 Small Business Voices, small business owners are more optimistic about their operations and the overall economy at the start of 2024.
• Recent data indicates that consumers and businesses are becoming more confident about the economy, as shown by the results of a survey.
• Despite the economic recovery, small business owners remain concerned about inflation and obtaining funding.

Despite ongoing inflation and lending challenges, small business owners are more optimistic about starting the year, according to a new poll released Thursday.

In 2024, 75% of small business owners are hopeful about their financial future, an increase from 68% in the previous year, as per a survey by Goldman Sachs 10,000 Small Business Voices.

The percentage of respondents who rated the economy as good or excellent has increased by 9% since the last quarter, with 28% of respondents giving this assessment.

A majority of small business owners surveyed expect to create jobs and anticipate an increase in profits this year.

Recent data indicates that consumer and business confidence in the economy has increased, following a period where inflation remained persistent and borrowing became more challenging.

Despite facing challenges such as inflation, access to capital, and workforce-related issues, 75% of small business owners remain optimistic, according to Joe Wall, managing director of government affairs at Goldman Sachs, who spoke to CNBC.

Over 1,400 small business owners participated in a nationwide survey conducted in mid-January.

‘Growth opportunities’ despite challenges

Ethel's Baking Company CEO Jill Bommarito stated that she has observed a decline in supply-chain issues and inflation, and noted that consumer spending remains strong. The company, which was founded in 2011 and currently employs 26 people, specializes in dessert bars and is sold in Whole Foods, Target, and Costco.

Growth opportunities exist, but we must face headwinds. Nevertheless, the demand for genuine brands and services is increasing, and it is more significant than ever, as stated by Bommarito, a Goldman Sachs 10,000 Small Businesses program graduate who receives business education and support services.

Respondents to the survey ranked the difficulty of the last four years, with small business owners finding 2023 nearly as challenging as 2020, the peak of the pandemic. Thirty-five percent of respondents said 2020 was their most challenging year, while 33% picked 2023.

Small business owners faced tough times last year due to inflation and supply-chain issues, according to Wall.

Despite a decrease in the rate of price increases, inflation remains a significant concern for business owners, with 71% of surveyed respondents reporting an increase in inflationary pressures over the past three months.

In December, small business concerns regarding rising prices surpassed labor issues and regulatory burdens, according to the National Federation of Independent Business' monthly sentiment survey.

On Wednesday, the Fed left interest rates unchanged and signaled it would not start trimming rates yet, which could explain some of the economic optimism in Goldman's data, Wall said.

High interest rates are also a concern for Main Street when it comes to lending. Nearly three-quarters, or 77%, of respondents to Goldman's survey expressed worry about their ability to obtain capital.

The survey revealed that 86% of respondents believe their growth forecast will be negatively impacted if Basel III Endgame plans increase capital holding requirements for larger and regional banks.

Goldman Sachs has come out against the Basel III Endgame proposal.

Nearly 80% of those surveyed who applied for a loan in the last year found it difficult to access affordable capital, while 40% received all of the funding they requested. Of the 35% of owners polled, just about one-third said they believe they can afford to take out a loan.

Predatory payment terms were found by 28% of loan applicants who took out a loan or line of credit.

In December 2023, the average short-term loan interest rate paid by business owners increased to 9.8% from 7.6% in January 2023, according to the NFIB's recent polling.

Bommarito said access to working capital is her top issue for 2024.

Small businesses, like hers, are the foundation of the economy, but are often viewed as the riskier option.