A mixed forecast for small businesses

Small businesses are sometimes seen as the U.S. economy's canary in the coalmine -- a key, and highly sensitive, indicator of the nation's financial well-being.

And while many of those small businesses, defined by the Small Business Association (SBA) as independent business with fewer than 500 employees, took a beating during the recession, recent studies suggest the canary is still fluttering, if not flying high.

Small businesses are a critical engine when it comes to economic growth. The SBA says they accounted for nearly two-thirds of the net new jobs created between 1993 and 2011. Even during the recession, from 2009 to 2011, businesses with 20 to 499 employees accounted for 67 percent of the net new jobs.

It's no wonder, then, that a lot of time and effort has been spent recently in monitoring the health of the small business sector.

Earlier this week, the National Federation of Independent Business (NFIB) noted its Small Business Optimism Index increased modestly last month, when it came to the percentage of small business owners who plan to increase capital spending and who expect higher sales during the next three months.

But in a press statement, NFIB chief economist Bill Dunkelberg says that those were "the two bright spots in an otherwise mixed reading. "And he added those small business owners are making capital investments and working to fill job openings "despite that they cannot anticipate a better economy. Basically they're preparing to taxi the runway but they don't expect to take off anytime soon."

The NFIB also noted the number of small business owners reporting problems in accessing capital was at a record low. Earlier this month, the SBA announced its 7(a) Loan Program -- meant to give small businesses financial assistance to cover businesses expenses like working capital, exports and debt refinancing -- hit a lending record for fiscal 2014. The SBA ended up approving more than 52,000 such loans for the year, a 12 percent increase compared to fiscal year 2013.

Other reports are suggesting better times for the small business sector. In late September, using statements filed over the past year, the financial information firm Sageworks reported a third straight quarter of good growth for private companies in the U.S. Sales grew at an average of 8.6 percent, while net profit margins were close to 7 percent. And despite its own concerns about the future of the current bull market as well as unemployment levels, the report's overall tone is optimistic.


"With revenues growing at a solid pace and profit margins remaining strong, private U.S. firms are showing positive signs that echo the strength of the most recent GDP revision and the broader market performance this year," it noted.

In in semi-annual Small Business Owner Report, Bank of America (BAC) says small business owners are increasingly confident in their local economies, with half of those surveyed believing that things will improve over the next 12 months.

But business owners remain wary about the national and global economies, with less than half optimistic about the national economy, and only 31 percent expecting the international economic picture to improve over the next year.