WEBVTT - Bank of America's Sharon Miller Talks Small Businesses

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio News.

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<v Speaker 2>Bank for America's Business Owner Report showing cautious optimism from

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<v Speaker 2>small and mid sized businesses as the FED prepares to

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<v Speaker 2>cut interest rates. Sharon Miller of Bank for America writing,

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<v Speaker 2>rate cuts will reduce the cost of debt servicing on

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<v Speaker 2>floating rate credit facilities. This easing of the expense environment

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<v Speaker 2>may create cash flow capacity for expansion or investment opportunities.

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<v Speaker 2>We're lucky this morning that Sharon gets to join us

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<v Speaker 2>on this program. Sharon, welcome to this program. I just

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<v Speaker 2>want to start with this one. The amount of insight

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<v Speaker 2>that you and the team have across one in every

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<v Speaker 2>three small businesses in America. We're worried about stress starting

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<v Speaker 2>to build, weakness starting to materialize. What are you seeing

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<v Speaker 2>in the businesses that you cover at the.

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<v Speaker 3>Moment, Well, you're right. We cover three point four million

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<v Speaker 3>small and mid sized businesses in the US and we

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<v Speaker 3>are the number one lender to small business across the US,

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<v Speaker 3>and so we do have a lot of insight into

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<v Speaker 3>what's happening. In our most recent survey that we did

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<v Speaker 3>with business owners in the spring, we found cautious optimism

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<v Speaker 3>from our clients and so they do expect their revenues

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<v Speaker 3>to increase over the next twelve months, and we know

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<v Speaker 3>that debt servicing, as you said in the opening here,

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<v Speaker 3>will be reduced because we do expect that rates will

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<v Speaker 3>be cut as wef our economists do here at Thank

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<v Speaker 3>of America twenty five bases point in the next five

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<v Speaker 3>said meetings.

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<v Speaker 2>So Shawny, you saying they've got the confidence the expansion

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<v Speaker 2>plans of ready that just waiting for small reductions for

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<v Speaker 2>the Federal Reserve over the next few qultzas.

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<v Speaker 3>They are, and we still see demand in the marketplace now,

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<v Speaker 3>So I'm not saying that they're rating entirely. There is

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<v Speaker 3>good growth in the across the small and mid sized

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<v Speaker 3>company sectors, but they are watching that and certainly as

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<v Speaker 3>we see rates come down, that will improve their cash

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<v Speaker 3>grow and certainly consumer demand.

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<v Speaker 1>Sharon I got to say, I was reading this report

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<v Speaker 1>shocked to the recent report that you put out. I

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<v Speaker 1>was kind of shocked that actually we saw such sanguine

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<v Speaker 1>sentiment that people were expecting to continue to hire, that

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<v Speaker 1>they were continuing to expand they had positive outlook for

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<v Speaker 1>their businesses. How do you reconcile that with some of

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<v Speaker 1>the rhetoric that we hear every single day. This is

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<v Speaker 1>an economy that's on the rais or edge of turning negative.

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<v Speaker 3>You know, I think with small and mid sized companies.

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<v Speaker 3>So we've bank clients in the business banking space from

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<v Speaker 3>startup to fifty million in revenues. And so when you

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<v Speaker 3>have a smaller company, you're certainly more nimble, You're able

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<v Speaker 3>to really, you know, think about your business, your growth,

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<v Speaker 3>and you can pivot easily. Bigger corporations may have more

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<v Speaker 3>you know, of a hard time doing that, and so

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<v Speaker 3>that is a competitive advantage of small to mid size

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<v Speaker 3>companies and we see that come through in the data

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<v Speaker 3>and just in our conversations that we're having every day

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<v Speaker 3>across the desk from these clients.

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<v Speaker 1>What I thought also was striking was in the market,

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<v Speaker 1>it seems like in FLA is no longer a significant concern.

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<v Speaker 1>We heard just a couple of days ago from Mike

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<v Speaker 1>Wilson over at Morgan Stanley that's dead. Essentially, inflation is

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<v Speaker 1>no longer an issue when it comes to what you're

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<v Speaker 1>seeing in bonds. Nonetheless, sixty eight percent of small business

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<v Speaker 1>owners so they've raised their prices over the past twelve

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<v Speaker 1>months and on average, they've raised prices by twelve percent.

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<v Speaker 1>They're talking about inflation as a more pressing concern than

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<v Speaker 1>many other things that we talk about every day. How

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<v Speaker 1>do you understand whether this is really a small business

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<v Speaker 1>issue or whether maybe we're not giving enough credence to

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<v Speaker 1>just how much ongoing inflationary pressure there actually is.

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<v Speaker 3>Well, there is ongoing and inflationary pressure. It is a

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<v Speaker 3>sticky issue, and so we continue to hear that that

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<v Speaker 3>is the number one concern of small and mid sized companies.

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<v Speaker 3>And so you have seen price increases brought along because

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<v Speaker 3>of all the pressure there. So I do see it

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<v Speaker 3>as a concern. We hear it from our business owners,

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<v Speaker 3>and we do feel that as we go forward and

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<v Speaker 3>the cycle begins to ease a bit, that it's going

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<v Speaker 3>to take some.

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<v Speaker 4>Pressure off Sharon, given that pricing pressure, how difficult is

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<v Speaker 4>it for these small companies to keep up with the

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<v Speaker 4>bigger players.

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<v Speaker 3>Well, I think that you know, there is some difficulty

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<v Speaker 3>in keeping up with the bigger players, but I would

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<v Speaker 3>say that you know, they also have a competitive advantage,

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<v Speaker 3>and so you know, as supply chains have improved and

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<v Speaker 3>as businesses have expanded, and certainly they've gone more online,

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<v Speaker 3>gone more digital, They have more reach and scale than

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<v Speaker 3>they might have had before the pandemic. And so what

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<v Speaker 3>we are seeing are expansion plans from small and missized

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<v Speaker 3>companies and they are competing and certainly, you know, they

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<v Speaker 3>benefit from the downstream impact as well from larger corporations.

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<v Speaker 4>We're talking about inflation. We're trying of the fact that

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<v Speaker 4>they're preparing for these rate cuts. When you talk to clients,

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<v Speaker 4>what is their number one concern right now in this economy?

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<v Speaker 3>Their number one concern is inflation, and then right next

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<v Speaker 3>to the is hiring and making sure that they have

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<v Speaker 3>the right skilled labor, the right employees to go into

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<v Speaker 3>their business to work. And so those are the concerns

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<v Speaker 3>that we hear every day. We were also in an

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<v Speaker 3>election year, so did you hear that as well, But

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<v Speaker 3>we hear that with every election cycle. We've been doing

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<v Speaker 3>this report for the last ten years, and so in

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<v Speaker 3>each election cycle, we'd see, you know, concerns once the

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<v Speaker 3>election is over, no matter who wins, no matter what party,

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<v Speaker 3>that there's certainty and so people can move forward. And

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<v Speaker 3>so that's what we're hearing this cycle as well. And

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<v Speaker 3>you know, I anticipate after November there'll be certainty and

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<v Speaker 3>people will continue as their plan.

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<v Speaker 2>Sharon, talk to us a little bit about how things

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<v Speaker 2>have changed since March of last year, given all the

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<v Speaker 2>banking stress in this country and some of the banking

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<v Speaker 2>fatures as well. How some of your clients have changed

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<v Speaker 2>the way they do business with you. Where they've managed

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<v Speaker 2>to attract a lot more small businesses over the last

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<v Speaker 2>twelve months. Worried about where they place that cash, and

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<v Speaker 2>they want to put it with a bigger institution like

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<v Speaker 2>Banks of America. Sharon, how much has changed?

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<v Speaker 3>Well, I mean, I think, listen, we are the number

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<v Speaker 3>one small business bank in the US, and we're very

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<v Speaker 3>proud of that. We have been for the last four

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<v Speaker 3>years plus, and so you know, we continue to stand

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<v Speaker 3>on our clients and good times and bad and certainly

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<v Speaker 3>you know, we every day we work to attract new

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<v Speaker 3>clients and to retain the clients we have because this

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<v Speaker 3>is our mission. This is where communities meet business and

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<v Speaker 3>that is what we do at Bank of America. So

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<v Speaker 3>we want to be sure that we are there for

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<v Speaker 3>our clients. We have the capabilities that they need, whether

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<v Speaker 3>it's to transact internationally, to be able to you know,

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<v Speaker 3>have expansion in their business, to get a loan, to

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<v Speaker 3>provide payments for merchants, so all of those different areas

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<v Speaker 3>we are able to help our clients, and so we

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<v Speaker 3>want to make sure that we're there for them, whether

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<v Speaker 3>it be our online tools and capabilities to manage their

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<v Speaker 3>cash flow. So we're investing in the business based on

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<v Speaker 3>what we hear from clients and what they need.

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<v Speaker 2>Well, we have with thanks that you managed to make

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<v Speaker 2>some time for us this morning, and we appreciate it. Sharon,

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<v Speaker 2>thanks for joining the program. Thank you, Sharon Miller. There

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<v Speaker 2>of Bank for America. I'm the latest insight into the

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<v Speaker 2>small business situation across this country, biggest banker of small businesses,