Optimism about the economy built slowly but steadily in the second half of 2012 among U.S. small and mid-sized businesses, some of which are likely to seek more credit in 2013 as they become increasingly confident in business fundamentals. 

A new Greenwich Market Pulse revealed that owners and executives of 40% of small businesses and 37% of midsized companies reported that the current environment has actually had a positive impact on their business. This study from Greenwich Associates covered 262 small businesses, defined as those generating revenues between $1 million and $10 million and 262 middle market companies, with sales of between $10 million and $500 million. 

One important contributor to that impact is the seemingly positive behavior of banks towards many small businesses. Forty-six percent of small businesses that borrowed in the three-month period ending in late October/early November reported that credit was “easier” or “much easier” to obtain as opposed to 24% approximately a year ago. 

Only 17% of small and mid-sized businesses said that they had accessed credit on the back of federally sponsored programs, an indication that many businesses had gotten loans on the strength of their performance in a challenging environment. 

Greenwich Optimism Index Turns Positive
The Greenwich Optimism Index moved into positive territory in the second half of 2012, indicating that, on net, small and mid-sized U.S. companies believe economic conditions are improving. The Index started 2012 in positive territory but quickly turned negative amid the European sovereign debt crisis and mixed signals about the direction of the U.S. economy. The uptick to a positive reading in the second half of last year was surprising uncertainty around the U.S. fiscal cliff and a variety of upcoming banking regulatory actions. 

“Many firms have managed to survive and even flourish in a volatile and slow-to-recover business environment. This partially explains the optimism that we are now seeing in many businesses,” says Greenwich Associates consultant David Heiner.