In a year already full of one step forward, one step backward economic predictions, May has been marked with yet more mixed messages. While one new survey found small business owners optimism strengthening, another reflected mounting fear over potential costs associated with credit card "reform" efforts.
A newly unveiled Wells Fargo/Gallup poll conducted in April finds small businesses are significantly more confident now than in July 2009. The Wells Fargo/Gallup Small Business Index returned a score of -11 for owner optimism, a five-point improvement from the previous quarter's study (conducted in January) and 10 better than that of July. A score of zero is considered a neutral outlook, said Wells Fargo.
"We see more small businesses describing their cash flows and current financial situation as good, and higher percentages [are] seeing an increase in revenues over the last 12 months," said Wells Fargo Senior Economist Scott Anderson. But even Anderson admitted a significant number of small business owners remain somewhat skeptical about the sustainability of the economic recovery.
Meanwhile, Web-based financial search engine/blog BillShrink unveiled its own study indicating small business owners could face more than $420 million in credit card finance charges in 2010 because the new Credit Card Accountability, Responsibility and Disclosure (CARD) Act doesn't extend the same protections to businesses as it does for consumers. As such, BillShrink argued credit card companies could raise interest rates on old balances as a way to make up for revenue it loses amid brand new, sweeping consumer protections. In its survey of 300 small businesses, a significant number of respondents reported receiving a 15% rate increase since the CARD Act Passage. Some saw as much as a 27% hike, said BillShrink.
"We did this research to shed light on the fact that small businesses are victim to the same egregious rate hikes consumers experienced before the oversight laws went into effect earlier this year," said BillShrink CEO Peter Pham. "The lack of regulation, coupled with shrinking access to credit is forcing many business owners to shift spending onto their personal cards, which can become a dangerous cycle negatively impacting their credit scores."
However, in the days since the survey's release, proposed amendments to a sweeping financial reform package preliminarily include provisions addressing swipe fees.
Brian Shappell, NACM staff writer