Main Street Mainstays Could Use a Leg Up on Small Business Saturday

The holiday weekend is here.

And, as has been seen over more than a decade, Small Business Saturday, a mainstay of the retail landscape initially promoted by American Express and now tied to the U.S. Small Business Administration, is here again.

Last year the “shop local” initiative helped drive just under $18 billion in spending.

The boost might be sorely needed by the smaller Main Street businesses that have traditionally powered economic growth here in the states.

PYMNTS Intelligence data has found that, coming into the second half of the year, more than half of small and medium-sized businesses (SMBs) have “no current access to credit.” Only about a third of the more than 500 SMB owners surveyed said they had access to both business and personal funds. Some 40% of SMBs remain more worried about inflation than one year ago. As many as 15% reported being concerned about declining revenues.

Credit Spigots Are Tightening

A boost in sales would be a critical way to meet operating expenses. If nearly half of SMBs are looking to tap into credit, as we’ve found they are, the spigots are decidedly being tightened. Last month, the Kansas City Fed estimatedthat new small business commercial and industrial (C&I) lending continued to decline in the second quarter, decreasing 16.8% from the same period in 2022 and 1.2% from the previous quarter. Drilling down into the data, the Fed found there was an 18.8% decrease in term loans and a 13.6% slide in lines of credit. Only 8% of the bank lenders surveyed said they’d increased their lending activity.

The tightening is at odds with SMB plans into the end of the year and beyond. Our data show that 48% have more credit in their plans — in a bid to meet the demand that they hope will materialize, or simply to weather the economic storm — 34% of all respondents do not currently use credit and want to begin doing so; and 14% currently have access to business credit sources and want to further expand their financing.

As many as 52% of SMBs are planning to use business credit cards — a significant jump from the 31% that have accessed them in 2023. In addition, 22% will consider using business loans from online lenders, departing at least a bit from the traditional channels that, as noted above, are tightening.

Financing may be critical given the uncertainty of the spending environment. As noted in recent days, retail spending declined in October for the first time in seven months. The government data show that it may the brick-and-mortar outfits that are hurt the most: Spending at department stores slipped 1.2%, spending at home furnishing and furniture stores was down 2% and miscellaneous store retailers saw sales slide by 1.7%.

Where consumers did spend their money can be boiled down to a few key categories, namely food and beverage stores, up 0.6%, and health and personal care establishments, where spending was up 1.1%. Apparel sales were flat. None of this data augurs well for Main Street SMBs.

Separately, Walmart sounded a bit of an alarm on the state of the consumer’s wallet and willingness to spend. As we reported in the wake of the retail giant’s earnings, Chief Financial Officer John D. Rainey noted during a conference call with analysts that, “recently, we’ve experienced a higher degree of variability in weekly performance in between holiday events in the U.S., including seeing a softening in the back half of October. It was off trend to the rest of the quarter.”

And, he added, “sales have been somewhat uneven, and this gives us reason to think slightly more cautiously about the consumer versus 90 days ago.”