Borrowing Is at Its Lowest in Four Years

Only 23% of small business owners are borrowing on a regular basis, the lowest share since 2021. Yet credit conditions are not the barrier. Just 3% of owners said their last loan was harder to get, and the average short-term loan rate fell to 8.1%, the lowest in more than two years.

Why Aren’t More Owners Borrowing?

The answer lies in profitability. A net –19% of owners reported earnings declines, and many pointed to weak sales and higher input costs as the culprits. Tariffs are also beginning to impact pricing, adding uncertainty to margins. Even as inflation readings ease, business owners remain cautious about taking on new obligations when their ability to service debt is under pressure.

Lender-Readiness Still Matters

This creates an important takeaway for small business leaders. Access to financing may be open, but it is not automatic. In times of tight margins, lenders scrutinize repayment capacity more closely. Businesses that can present strong financials, a clear growth plan, and evidence of stability are far more likely to secure favorable terms.

Turning Optimism into Opportunity

Optimism may set the tone, but profitability and preparedness ultimately determine access to capital. In today’s environment, the businesses that stay lender-ready will be best positioned to act when financing opportunities align with their growth goals.

Your next move matters. Connect with us to shape financing strategies that keep your business lender-ready and positioned for growth.

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