Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.
Data for today’s episode is provided by Mercator Advisory Group’s Blog – 2020 Small Business PaymentsInsights: SMB Attitudes and Banking – Charting a New Course
Where Do Small Businesses Get Their Advice?
- The pandemic had more SMBs seeking advice from more outlets this year, except maybe accountants.
- SMBs that were negatively impacted by COVID were much more likely than others to seek advice from their bank.
- Smaller companies are more likely to rely on friends and family and less likely to rely on their bank than others.
- Banks and financial advisors are the more relied sources of advice for small businesses.
- Firms that were positively impacted by the pandemic were more likely to turn to their bank for advice.
- Banks and financial advisors are the most trusted, though companies under $1M are least likely to have financial advisors.
Mercator Advisory Group’s most recent Primary Data report, 2020 Small Business PaymentsInsights: SMB Attitudes and Banking- Charting a New Course, based on the company’s annual Small Business PaymentsInsights survey conducted in Spring 2020, reveals that small businesses continue to trust their banks, but are more and more looking for advice, wisdom—and credit—from outside sources. Satisfaction with their primary bank’s commitment to small businesses remains very high at 84%. Furthermore, they are looking to a broader range of individuals for advice in running their business beyond their primary financial institution. Also, four in 10 (39%) are looking for a larger credit line than they currently have which is up from the 32% reported last year.
Usage of small business charge cards and small business debit is increasing year over year. Business debit card use has increased from 34% in 2019 to 42% in 2020, and charge card use grew from 23% to 31%. Small businesses may be moving some of their credit card transactions to other payment types in order to avoid revolving credit.
While 2020 has been a hard year for all, small business as a category was particularly hard hit. That said, not all small businesses were negatively affected by the pandemic; some even thrived. When this survey was conducted in April of this year (the relative early days of the pandemic in retrospect), one-quarter (24%) of SMBs surveyed reported that the pandemic had positively affected their business, and another 17% reported they were unaffected. The remaining 59% were negatively impacted.
SMB Attitudes and Banking- Charting a New Course is the third of three reports summarizing the results of the 2020 Small Business PaymentsInsights survey, the fourth annual survey of small businesses fielded by Mercator Advisory Group. This was a web-based survey of 2,000 U.S. small businesses (between $100,000 and $10 million annual sales) regarding their use of payments and banking services.
“The pandemic has brought a new perspective to many businesses, they are looking for more advice from a wider variety of individuals as they navigate the tough times. I think it is important to note that despite the upheavals that 2020 brought, a majority of the small businesses we surveyed still have plans to grow their business in the future,” notes the author of this report, Peter Reville, Director, Primary Data Services at Mercator Advisory Group.