A new survey from TD Bank reveals that although many small business owners feel confident, they believe that they lack the savings and planning necessary to weather prolonged revenue shortfalls. In today’s episode of The Small Business Show, Head of SBA Lending at TD Bank, Tom Pretty, joins us to break down more of the findings from the survey.
The NFIB Small Business Optimism Index rose three points in May, reflecting growing confidence among small business owners. However, TD Bank’s Financial Preparedness Survey, which assesses how well small business owners are prepared for financial disruptions, reveals significant monetary concerns hovering just beneath the surface of the optimism.
Ninety-four percent of small business owners believe that their company is prepared for the next 12–18 months. However, 72% percent of surveyed small business owners reported that their business could only endure two quarters of revenue shortfall, and 43% stated that their company wouldn’t survive if revenue fell for three to four quarters. This contrast suggests that optimism may not align with financial preparedness.
Regarding savings and planning, nearly half (47%) of small business owners report having less saved for operating expenses than they believe is necessary for their business. Almost all (99%) of respondents assess their financial preparedness on a quarterly basis; however, many lack sufficient reserves or access to capital.
"Getting a banker and a line of credit can be a great tool to have in your arsenal to weather some seasonality or if a good opportunity comes for your business."
Many entrepreneurs seek financial guidance from fellow small business owners, books, articles, and even AI. Still, they often don’t take full advantage of the expertise offered by bankers or SBA specialists. Less than half (46%) of them regularly consult financial advisors or bankers for advice.
Debt, when used strategically, can be a powerful tool for business growth. Eighty-two percent of surveyed small business owners anticipate seeking a loan or line of credit in the following year. However, it’s critical to seek financing in a strategic, timely manner. More often than not, small business owners wait too long to approach lenders, only seeking assistance when they’re in a financial bind. This puts them at a disadvantage where they’re at the mercy of the lender and may not be able to secure the best financing terms. Pretty encourages small business owners to seek financing before it becomes urgent.
Despite the economic volatility, such as tariffs, inflation and global shifts, it’s still an excellent time to start a business. Pretty advises entrepreneurs to act when they identify a market need, as the SBA is expanding loan opportunities, particularly in sectors such as manufacturing.
When used strategically, debt can help businesses grow and, in some cases, provide a buffer when things get shaky. Pretty advises small business owners to research and learn about their financing options and prepare in advance to safeguard their businesses. Both the U.S. Small Business Administration (SBA) and TD Bank offer valuable resources, including financing offers for small businesses.
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