Speaker 1: Bloomberg Audio Studios, podcasts, radio News.
Speaker 2: Bank for America's Business Owner Report showing cautious optimism from
Speaker 2: small and mid sized businesses as the FED prepares to
Speaker 2: cut interest rates. Sharon Miller of Bank for America writing,
Speaker 2: rate cuts will reduce the cost of debt servicing on
Speaker 2: floating rate credit facilities. This easing of the expense environment
Speaker 2: may create cash flow capacity for expansion or investment opportunities.
Speaker 2: We're lucky this morning that Sharon gets to join us
Speaker 2: on this program. Sharon, welcome to this program. I just
Speaker 2: want to start with this one. The amount of insight
Speaker 2: that you and the team have across one in every
Speaker 2: three small businesses in America. We're worried about stress starting
Speaker 2: to build, weakness starting to materialize. What are you seeing
Speaker 2: in the businesses that you cover at the.
Speaker 3: Moment, Well, you're right. We cover three point four million
Speaker 3: small and mid sized businesses in the US and we
Speaker 3: are the number one lender to small business across the US,
Speaker 3: and so we do have a lot of insight into
Speaker 3: what's happening. In our most recent survey that we did
Speaker 3: with business owners in the spring, we found cautious optimism
Speaker 3: from our clients and so they do expect their revenues
Speaker 3: to increase over the next twelve months, and we know
Speaker 3: that debt servicing, as you said in the opening here,
Speaker 3: will be reduced because we do expect that rates will
Speaker 3: be cut as wef our economists do here at Thank
Speaker 3: of America twenty five bases point in the next five
Speaker 3: said meetings.
Speaker 2: So Shawny, you saying they've got the confidence the expansion
Speaker 2: plans of ready that just waiting for small reductions for
Speaker 2: the Federal Reserve over the next few qultzas.
Speaker 3: They are, and we still see demand in the marketplace now,
Speaker 3: So I'm not saying that they're rating entirely. There is
Speaker 3: good growth in the across the small and mid sized
Speaker 3: company sectors, but they are watching that and certainly as
Speaker 3: we see rates come down, that will improve their cash
Speaker 3: grow and certainly consumer demand.
Speaker 1: Sharon I got to say, I was reading this report
Speaker 1: shocked to the recent report that you put out. I
Speaker 1: was kind of shocked that actually we saw such sanguine
Speaker 1: sentiment that people were expecting to continue to hire, that
Speaker 1: they were continuing to expand they had positive outlook for
Speaker 1: their businesses. How do you reconcile that with some of
Speaker 1: the rhetoric that we hear every single day. This is
Speaker 1: an economy that's on the rais or edge of turning negative.
Speaker 3: You know, I think with small and mid sized companies.
Speaker 3: So we've bank clients in the business banking space from
Speaker 3: startup to fifty million in revenues. And so when you
Speaker 3: have a smaller company, you're certainly more nimble, You're able
Speaker 3: to really, you know, think about your business, your growth,
Speaker 3: and you can pivot easily. Bigger corporations may have more
Speaker 3: you know, of a hard time doing that, and so
Speaker 3: that is a competitive advantage of small to mid size
Speaker 3: companies and we see that come through in the data
Speaker 3: and just in our conversations that we're having every day
Speaker 3: across the desk from these clients.
Speaker 1: What I thought also was striking was in the market,
Speaker 1: it seems like in FLA is no longer a significant concern.
Speaker 1: We heard just a couple of days ago from Mike
Speaker 1: Wilson over at Morgan Stanley that's dead. Essentially, inflation is
Speaker 1: no longer an issue when it comes to what you're
Speaker 1: seeing in bonds. Nonetheless, sixty eight percent of small business
Speaker 1: owners so they've raised their prices over the past twelve
Speaker 1: months and on average, they've raised prices by twelve percent.
Speaker 1: They're talking about inflation as a more pressing concern than
Speaker 1: many other things that we talk about every day. How
Speaker 1: do you understand whether this is really a small business
Speaker 1: issue or whether maybe we're not giving enough credence to
Speaker 1: just how much ongoing inflationary pressure there actually is.
Speaker 3: Well, there is ongoing and inflationary pressure. It is a
Speaker 3: sticky issue, and so we continue to hear that that
Speaker 3: is the number one concern of small and mid sized companies.
Speaker 3: And so you have seen price increases brought along because
Speaker 3: of all the pressure there. So I do see it
Speaker 3: as a concern. We hear it from our business owners,
Speaker 3: and we do feel that as we go forward and
Speaker 3: the cycle begins to ease a bit, that it's going
Speaker 3: to take some.
Speaker 4: Pressure off Sharon, given that pricing pressure, how difficult is
Speaker 4: it for these small companies to keep up with the
Speaker 4: bigger players.
Speaker 3: Well, I think that you know, there is some difficulty
Speaker 3: in keeping up with the bigger players, but I would
Speaker 3: say that you know, they also have a competitive advantage,
Speaker 3: and so you know, as supply chains have improved and
Speaker 3: as businesses have expanded, and certainly they've gone more online,
Speaker 3: gone more digital, They have more reach and scale than
Speaker 3: they might have had before the pandemic. And so what
Speaker 3: we are seeing are expansion plans from small and missized
Speaker 3: companies and they are competing and certainly, you know, they
Speaker 3: benefit from the downstream impact as well from larger corporations.
Speaker 4: We're talking about inflation. We're trying of the fact that
Speaker 4: they're preparing for these rate cuts. When you talk to clients,
Speaker 4: what is their number one concern right now in this economy?
Speaker 3: Their number one concern is inflation, and then right next
Speaker 3: to the is hiring and making sure that they have
Speaker 3: the right skilled labor, the right employees to go into
Speaker 3: their business to work. And so those are the concerns
Speaker 3: that we hear every day. We were also in an
Speaker 3: election year, so did you hear that as well, But
Speaker 3: we hear that with every election cycle. We've been doing
Speaker 3: this report for the last ten years, and so in
Speaker 3: each election cycle, we'd see, you know, concerns once the
Speaker 3: election is over, no matter who wins, no matter what party,
Speaker 3: that there's certainty and so people can move forward. And
Speaker 3: so that's what we're hearing this cycle as well. And
Speaker 3: you know, I anticipate after November there'll be certainty and
Speaker 3: people will continue as their plan.
Speaker 2: Sharon, talk to us a little bit about how things
Speaker 2: have changed since March of last year, given all the
Speaker 2: banking stress in this country and some of the banking
Speaker 2: fatures as well. How some of your clients have changed
Speaker 2: the way they do business with you. Where they've managed
Speaker 2: to attract a lot more small businesses over the last
Speaker 2: twelve months. Worried about where they place that cash, and
Speaker 2: they want to put it with a bigger institution like
Speaker 2: Banks of America. Sharon, how much has changed?
Speaker 3: Well, I mean, I think, listen, we are the number
Speaker 3: one small business bank in the US, and we're very
Speaker 3: proud of that. We have been for the last four
Speaker 3: years plus, and so you know, we continue to stand
Speaker 3: on our clients and good times and bad and certainly
Speaker 3: you know, we every day we work to attract new
Speaker 3: clients and to retain the clients we have because this
Speaker 3: is our mission. This is where communities meet business and
Speaker 3: that is what we do at Bank of America. So
Speaker 3: we want to be sure that we are there for
Speaker 3: our clients. We have the capabilities that they need, whether
Speaker 3: it's to transact internationally, to be able to you know,
Speaker 3: have expansion in their business, to get a loan, to
Speaker 3: provide payments for merchants, so all of those different areas
Speaker 3: we are able to help our clients, and so we
Speaker 3: want to make sure that we're there for them, whether
Speaker 3: it be our online tools and capabilities to manage their
Speaker 3: cash flow. So we're investing in the business based on
Speaker 3: what we hear from clients and what they need.
Speaker 2: Well, we have with thanks that you managed to make
Speaker 2: some time for us this morning, and we appreciate it. Sharon,
Speaker 2: thanks for joining the program. Thank you, Sharon Miller. There
Speaker 2: of Bank for America. I'm the latest insight into the
Speaker 2: small business situation across this country, biggest banker of small businesses,