Optimism Up, But Cash Flow Remains a Challenge

Although overall small-business owner optimism is on the rise, many concerns about cash flow and borrowing remain.

The May results from the National Federation of Independent Business Index of Small Business Optimism indicate that owners are increasingly confident in the prospects for an economic recovery, as the index gained another 2.1 points.

NFIB says this demonstrates that the index has bottomed out and more good news from business owners should be on the horizon.

"It does appear that the decline in spending for inventory and capital projects has bottomed and will turn up in the coming months," said NFIB chief economist William Dunkelberg.

"Plans to order more inventory are 10 percentage points higher than March's low reading, and plans to make capital expenditures are four points above March readings," he added.

But businesses still struggle with access to credit, and NFIB reports that business loan demand is down and "cash conservation" is a top priority. The group says that 16 percent of survey respondents found business loans currently harder to obtain than they were last quarter.

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