Newtek Business Services announced the release of the Small
Business Authority Index for August 2011, which reached 108.06 points. The SB
Authority Index is up 0.76 percent from July 2011, with approved SBA loan
volumes, the Russell microcap index and retail sales causing the increase in
the index. However, the index growth was limited by the flat and slight
reduction within the other five components.
Newtek President and CEO Barry Sloane said the small
business economy continues to struggle as consumer spending and employment
trends are clearly reducing economic activity. Plus, the recent announcement of
monetary policy by the Federal Reserve may increase interest rates to small
businesses as most small businesses borrow on a prime rate basis and off the short
end of the yield curve.
"If Federal Chairman Bernanke's 'twist strategy' works,
long-term rates will decline but at the expense of short-term interest rates
increasing. Again, if the strategy works, it will be most beneficial to the
long end of the market, which drives residential mortgage rates lower and cost
to refinance lower," Sloane said. "This should put increased cash and
disposable income in hands of consumers and may take several months before we
see the effects. Short-term rate hikes to small businesses will be effective
immediately."
The company also released the findings of its SB Authority
Market Sentiment Survey, a monthly window into the concerns of independent
business owners. Based on a poll of approximately 1,100 respondents, one of the
key findings from the survey was that 69 percent of small business owners do
not plan on hiring. In addition, two other questions in their survey appeared
to support the findings of business pessimism.
Most business owners, looking out on the horizon, are either
pessimistic or neutral at best, regarding the overall business environment.
Several business owners during the last 12 months have raised their prices or
maintained them to fight off the effects of inflationary pressures eroding
their margins. Business owners in
an economy described as stagnant said they need to improve their cash flows and
bottom lines while continuing to look toward the only segment of their business
where the market enables them to improve their cash flows.
"Technology
utilization needs to be embraced by small to medium-sized business owners over
the next several years. It is the only area where internal costs to run one's
business can be reduced as well as produce efficiencies in performance and
production of one's labor pool," Sloane said. "There is no denying
the trend of utilizing the cloud environment for computing and operating one's
business is far superior in costs, security and efficiency than what business
owners are typically using today."
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