Sentiment on Main Street has improved over the past month, and the NFIB investigation released July 14 placed the small business optimism index at 97.4 for June. That represents a gain of 2.1 points and leaves the measure just below the 98.0 average it has maintained over 52 years. More positive sales expectations contributed largely to this improvement.
A calmer figure deserves more of your attention. Homeowners borrowing on short maturities paid an average of 7.4% in June, a level last seen in fall 2022. Anyone who has postponed equipment, software, or a second job now faces different arithmetic, and that arithmetic crosses your small business cash flow.
Read the June figures
The improvement was more limited than broad. Expectations have evolved significantly, while the conditions in which owners actually operate have barely changed.
| Component | June reading | Change from May |
|---|---|---|
| Optimism Index | 97.4 | +2.1 |
| Uncertainty index | 89 | -2 |
| Expect better conditions (net) | 13% | +10 |
| Expect higher actual (net) sales | 9% | +8 |
| Plan capital expenditures | 20% | +4 |
Two personalities plead in favor of restraint. Uncertainty declined slightly but remains at 89, above its long-term level of 68. Hiring told a similar story, with the employment measure stable at 100.2 and about a third of owners unable to fill their open positions.
In other words, homeowners feel better about what’s coming without seeing much change ahead of them yet. This gap deserves to be respected before acting on the title.
Cheaper credit, fewer borrowers
Now the contradiction. Rates have fallen, and with them the demand for credit. Regular borrowing was reported by 22% of homeowners, a five-point monthly decline that leaves the figure about a third below its historical norm of 34%.
This combination generally signals caution rather than opportunity. Faced with high uncertainty and banal growth, owners prefer to settle for cash rather than commit to a payment schedule. The instinct is reasonable, and it’s also worth challenging whether your demand has been stable for three or four quarters.
Before you decide one way or another, be clear about what is actually available to you. Terms on SBA 7(a) Loans behave nothing like a revolving bank line, and faster-growing companies increasingly weigh on both. risk debt. Compare the total cost over the entire duration, not the advertised price.
Price pressure that no one appreciates
Inflation returned to the top of the list of concerns in June. About one in five homeowners cited it as their biggest problem, the most significant reading since late 2024.
The behavior followed. On a net basis, 38% pushed sales prices higher, extending a period that has now lasted four straight months and reached its highest point since early 2023. True pricing power is a gift, although it comes with a volume bill if you lean on it too hard.
The outlook is softening a little. Net plans for price increases in the next quarter fell two points to 32%, suggesting landlords are expecting some relief. Consider this a prediction to test, not a promise to build your budget on.
Three questions before financing anything
Capital expenditure projects reached 20%, the highest figure of the year. If you’re considering something similar, three questions generally settle it.
- Will it reduce a cost that you can already measure each month, or will it only create capacity that you hope to sell later?
- Can current revenues cover the payment, without a growth assumption?
- If sales fall 15% for two quarters, what is the value of the asset and how quickly could you exit?
Answer it clearly and the decision tends to make itself. Purchases with a measurable return on investment are generally justified even at 7.4%. Capacity bets without committed demand are rarely feasible.
Buying is the alternative worth evaluating alongside building. As financing becomes more flexible and more homeowners head toward retirement, building existing income may be preferable to building it from scratch. This is why a growing number of young operators are looking for how buy a business.
Which would confirm a real turning point
NFIB Chief Economist Bill Dunkelberg painted a mixed picture of June, crediting improving expectations while noting that borrowing costs and slow growth still cause owners to remain cautious about hiring and investing.
Three developments would turn a decent month into a trend. Watch for uncertainty as it continues to decline toward its long-term average. Watch for regular borrowings that go beyond 30%. Watch for plans for price increases to ease further rather than stagnate.
The next publication will take place in August, since the survey is published on the second Tuesday of each month. Until then, view June as a reason to reexamine your numbers rather than a signal to act quickly.
