Small businesses are showing resiliency
Even as the Federal Reserve continues to hike interest rates, the fallout from Silicon Valley Bank looms and inflation puts pressures on every market, most small business owners across the country — and the region — remain “optimistic,” a study published by Bank of America on April 27 found.
According to the report, about 72% of small business owners in the U.S. are concerned about the impact of a potential recession, however, 76% of them are confident their business could withstand the downturn.
While that is a national statistic, Kristi Alameda, the Senior Vice President of Small Business Banking Manager at Bank of America covering Ventura and Santa Barbara counties, told the Business Times she is seeing that same “optimism” here at home.
“Even though we are seeing shortages in supply chains, labor, and all these things, entrepreneurs in Santa Barbara County and Ventura County are resilient and want to keep growing their business,” she said.
Alameda has worked at Bank of America for more than two decades, having spent the last 10 years covering the majority of the Central Coast while living in Ventura County.
She is no stranger to the region. As a child, she grew up in Camarillo and remembers helping her family pick strawberries in Oxnard.
“I understand what it’s like to be a working person in these counties and I take pride in helping my clients, which helps drive the economy as a whole,” she said “Bank of America gives me a lot of resources to help people in my community and I take a great deal of pride in that.”
One of the more interesting things the report found is that, despite the headwinds, small business owners aren’t just expecting to maintain a business in 2023, but they still want to grow.
Alameda said in talking with small business owners in the area — she has about 20,000 clients in a given year – 65% of them are expecting to see revenue growth in 2023.
Nearly half, 48%, of small business owners plan to expand their business in the year ahead, up 11% since last spring.
As a result, many are planning to hire as the study found that 34% of business owners plan to hire in 2023, up from 26% last spring.
Both statistics hold true for the region.
“We are absolutely hearing that hiring is a priority and what they are saying and what they anticipate is to hire more than they did last year,” she said.
The requests for capital to expand are coming from a variety of sources, from healthcare professionals to restaurants to manufacturers in the area, Alameda said.
“That is what is special about Santa Barbara and Ventura Counties, you have the gamut of small business owners, from mom-and-pop to large manufacturing businesses,” she said.
While work-from-home continues to be a contentious issue for some companies — with a fraction arguing for its importance while others see it as a cost-saving measure — Alameda believes companies on the Central Coast want to keep a local workforce, even if they eventually move beyond just this area.
She recalled a story in which she looked to pass a Ventura County client to a Bank of America manager based in Los Angeles to which he responded, “I would rather have someone from Ventura.”
“The Ventura small business owners want employees from Santa Barbara and Ventura and they want their bankers from here as well. Work from home won’t get these businesses to hire too far out, because it’s important to them,” she said.
As companies look to grow in 2023, access to capital will be just as important.
“Last year it was a lot of conventional financing but this year, we are helping clients with Small Business Administration financing,” she said.
The difference between conventional financing and leveraging the SBA, for example, is that it is the SBA providing the guarantees on the loan, usually resulting in longer terms to pay down said loans at a lower rate.
Of the $37 million given by Bank of America, $12 million of that is in SBA financing to buy new facilities or expand however they would like.
In regards to the banking crisis — in which Silicon Valley Bank’s failure has led to a spinout of other small and mid-size banks, most recently First Republic — Alameda said she is seeing more people wanting to bank with larger operations, like Bank of America, as a result.
“They want the safety and security from the well-capitalized banks,” she said.
Larger banks are also only getting larger, with JPMorgan Chase being the beneficiary of First Republic’s closure, purchasing the operation on May 1.
Regardless of that outcome, the overall optimism of small businesses in the area looking to expand is a testament to the region, Alameda said, who said she is outpacing last year’s record mark.
In 2022, Bank of America lent out over $104 million to small businesses in Ventura and Santa Barbara counties, according to Alameda. Through April of this year, the bank has lent $37 million, and it’s on pace to lend over $120 million in this area alone in 2023.
“The fact that my phone continues to ring asking how we could help them grow their business and lending is growing year over year tells me clients want access to capital,” she said.