A report found that 43% of small and medium-sized businesses in the U.S. are preparing for a recession in 2019. This is indicated by the lack of business interest in borrowing money for expansion purposes and the preference of small business owners to obtain loans from informal and short sources of credit.
The report is based on the PCA Index Survey Responses Trend Analysis which was conducted by the Pepperdine Graziadio Business School and Dun & Bradstreet between January 24 and February 4, 2019. The survey found that 76% of small business owners plan to borrow money from family and friends while 78% plan to use their business credit cards. For minority business owners, 60% of them said capital challenges will restrict their growth opportunities. Around 12% expect problems in getting their capital to grow, 21% in recruiting quality employees and 28% in finding and retaining customers.
Despite this, 48% of respondents believe they will perform better this year compared to 2018 and 57% are extremely confident that they will be able to grow revenues in 2019. According to Dun & Bradstreet lead economist Nalanda Matia, an economic downturn poses a greater risk for small businesses because they are already having financial problems in the stable lending environment. The study also found that 82% of small business owners were not affected by the government shutdown.