CHERRY HILL, N.J., May 3, 2021 /PRNewswire/ -- Small business
owners (SBOs) report they are doing better than expected as the
economy continues to gain steam amid the waning pandemic, according
to the results of the 2021 Small Business Survey, released today by
TD Bank, America's Most Convenient Bank®. The survey
polled more than 750 small businesses nationwide with less than
$5 million in annual revenue, from
sole proprietors with home-based businesses to professional
services and retail. It showed that 41% of SBOs expect to grow
their revenue in 2021 while only 9% anticipate a decline.
What's more, 57% expect to expand hours and/or operations and 9%
will add a business location in the next 12 months. Main Street may
not see as many vacancies in 2021 as predicted: just 3% of SBOs
anticipate closing permanently in the next year and only 2% plan to
sell their business. Despite their cautious optimism, respondents
identified the national economy (43%), COVID-19 and associated
operational restrictions (41%) and a decrease in revenue or sales
(39%) as their top challenges in the year ahead.
Eyeing Expansion Over Extinction
Most SBOs have not
been deterred amid the pandemic, with 37% considering expanding
product lines and services to grow business revenue or increase
profits.
The future of jobs is also looking up, with nearly three-in-four
(73%) respondents anticipating that their employee base will stay
the same and 16% anticipating their number of employees will grow.
This finding is aligned with national unemployment figures, which
have recently dipped to 6%.
"COVID-19 required small businesses to adapt to new business
operations and incorporate new revenue-generating strategies nearly
overnight," said Jay DesMarteau,
Head of Commercial Distribution, TD Bank. "Entrepreneurs are
incredibly resilient, though, and it is encouraging that they
report a more positive outlook and do not anticipate losing their
livelihood."
Government Aid Helpful, But More Needed
When asked
about the effectiveness of government programs like the U.S. Small
Business Administration's (SBA) Paycheck Protection Program (PPP)
and Economic Injury Disaster Loans (EIDL), two-thirds of SBOs (66%)
stated that these programs provided necessary funding for small
businesses or were helpful, but need more funding allocated to the
programs to really make an impact.
Twenty-one percent of respondents took advantage of the PPP
prior to March 2021, when the study
was fielded, with nearly half of SBOs in Gen Z and younger
millennials (ages 18 to 34) more likely to apply for these programs
compared with just 11% of those 55 and older.
Cautious but Confident
The survey also highlighted
some trends that provide a snapshot of how SBOs are running their
businesses against the backdrop of the pandemic.
Although COVID-19 brought financial challenges, 78% of
respondents are still most confident in handling the finances and
accounting for their business. Other areas where business owners
expressed confidence were:
- Opting to use digital/online banking features (76%)
- Managing their employees and human resources needs such as when
to hire (74%)
- Knowing when to seek additional credit or financing (66%)
- Knowing how to grow their business (63%)
Despite the pandemic serving as a catalyst for the surge of
contactless payment solutions and SBOs' growing reliance on digital
and online banking features, a surprising 66% of respondents still
process payments by collecting checks and cash, making these
physical transactions the most popular payment method. One-third of
respondents use person-to-person payments like Zelle or Venmo,
eCommerce/Online sites (28%) or electronic transfer such as ACH
payments (28%.) Just 19% report using a traditional Point of Sale
(POS) system.
The Facts on Future Finance Needs
When considering
finances, 58% of respondents have no loan or line of credit needs,
although one in three applied for a loan – including PPP – or line
of credit in the past 12 months. This is higher than 2019, when
just 20% of businesses had applied for a loan or line of credit and
62% had no credit needs, showing COVID-19's impact on business
owners' need or desire to have access to capital when needed.
Looking ahead, only 14% said they would apply for a loan or line
of credit in the next year. A majority of SBOs are saying "charge
it," however, with 60% reporting they have a credit card to cover
business purchases and 42% use cash back or other credit card
rewards to fund critical expenses.
"Although funding programs like PPP provided much-needed
stimulus for small businesses, there is a sense of caution about
taking on new debt this year. Business owners should speak with
their banker to understand the benefits and risks related to
various credit products and better understand how credit could
potentially accelerate growth," DesMarteau said.
Survey methodology
The study was conducted from
March 12-19, 2021, among a
representative group of 754 U.S. small business owners with less
than $5 million in annual revenue.
The survey was hosted by research company MARU/Matchbox.
About MARU/Matchbox
MARU/Matchbox is a professional
services firm dedicated to improving its clients' business
outcomes. It delivers its services through teams of sector-specific
research consultants specializing in the use of Insight Community
and Voice of Market technology.
About TD Bank, America's Most Convenient
Bank®
TD Bank, America's Most Convenient Bank, is one of the 10 largest
banks in the U.S., providing more than 9.5 million customers with a
full range of retail, small business and commercial banking
products and services at more than 1,220 convenient locations
throughout the Northeast, Mid-Atlantic, Metro D.C., the Carolinas
and Florida. In addition, TD Bank
and its subsidiaries offer customized private banking and wealth
management services through TD Wealth®, and vehicle
financing and dealer commercial services through TD Auto Finance.
TD Bank is headquartered in Cherry Hill,
N.J. To learn more, visit www.td.com/us. Find TD Bank
on Facebook at www.facebook.com/TDBank and on Twitter
at www.twitter.com/TDBank_US and www.twitter.com/TDNews_US.
TD Bank, America's Most Convenient Bank, is a member of TD Bank
Group and a subsidiary of The Toronto-Dominion Bank of Toronto, Canada, a top 10 financial services
company in North America. The
Toronto-Dominion Bank trades on the New
York and Toronto stock
exchanges under the ticker symbol "TD". To learn more,
visit www.td.com/us.
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SOURCE TD Bank