According to experts from the International Monetary Fund, the global economy is continuing to gain momentum. After a strong year, with global trade and industrial production exceeding projections, worldwide output will beat the 3.5% growth of 2017. Analysts from Goldman Sachs Research are even predicting 4% GDP growth in 2018.
What about the outlook for the United States specifically? And how will that impact small businesses?
The good news is that the U.S. economy is on track to deliver a fertile business environment. This outlook is based largely on the GDP growth rate, which should hover somewhere in the 2-3% range.
Beyond the key metric of GDP, the economy continues to look healthy. Manufacturing is anticipated to grow at a clip approaching 3%. Job rates and consumer spending are both trending upward, placing them above the long-run average.
All this good news is breeding optimism among consumers. After all, it’s easier to buy that new TV when you have money in your bank account, and it’s easier to order catering for grandma’s birthday party when you and your family members are all employed.
All that optimism bodes well for small business owners, who will have a bounty of business financing options available to help them leverage consumer confidence in 2018. For example, the Small Business Administration (SBA) has indicated it’ll reduce its equity requirement for business acquisition loans. This could make SBA loans even more accessible to entrepreneurs.
Likewise, fast and efficient loan options are increasing in lending marketplaces. According to the U.S. Department of the Treasury, these marketplaces are “a fast-growing sector that is continuously evolving.” The report highlights the fact that loan applications through traditional banks are typically approved about half the time, while 60-70% of loan applications are approved through a marketplace.
Another factor that could benefit small businesses next year is the pro-business approach in Washington that’s yielding some noticeable results. This includes looser regulations and higher interest rates, which may encourage lenders to approve more loans.
More specifically to small business owners, tax reform will likely bring big benefits to pass-through entities. The majority of small businesses in the U.S. are set up as pass-through entities, including sole proprietorships, limited liability companies, and partnerships. So if your business falls into one of those categories, you may be getting a tax break that helps you compete with bigger corporations.
Cheers to 2018!