Main Street Merchants See Light at End of 2024 Tunnel

We’re roughly at the midpoint of 2024, and the midpoint is a good time to take stock of where we’ve been and what lies ahead.

For the Main Street small businesses that power job creations and wages — and are dependent on the state of the U.S. consumer — the prognosis for the next six months can be viewed as positive.

However, there are still bumps in the road to navigate, particularly when it comes to accessing credit.

There are roughly 33 million small businesses in the United States, according to the Small Business Administration. Not all that long ago, a significant percentage of those firms felt like they were at risk of going out business, given the vagaries of the pandemic, cash crunches and declining revenues.

But in recent months, as PYMNTS Intelligence noted this spring, Main Street businesses saw growth that exceeded GDP growth for the first time in two years.

That’s according to data measured in 2023, with revenues growing by 6% and GDP increasing by 5.7%. The numbers mark a significant reversal from 2021, when GDP grew by 11% but smaller firms saw their top lines grow by a fraction of that rate, at 3.2%.

Spending on Services Boosts the Hospitality Sector

The growth in the hospitality segment — where revenues were up 10% in 2023 versus 1.5% in 2022 — gives a sense of where consumers have shifted their spending, namely to experiences, especially travel and dining out. It’s the firms that are growing that have access to credit, where we found that those companies have access to 1.8 types of credit, on average. In comparison, SMBs with decreasing and stable revenue report access to 1.5 types of credit on average.

But these same companies are a bit wary about tapping credit. As PYMNTS Intelligence found earlier this year, a third of Main Street business owners surveyed said loan costs remained a concern in 2024. Ninety percent of small- to medium-sized businesses (SMBs) relied on at least one type of borrowing tool through 2023. Meanwhile, 73% of SMBs turned to revolving credit products — such as credit cards and lines of credit — making them the most popular option.

Separate PYMNTS Intelligence research found that at the midpoint of last year, only 47% of SMBs generating annual revenues of $10 million or less said they had access to business or personal financing.

Age and Size Matter

We found older small businesses appear to be an exception to the growing revenues uplift small businesses are seeing — at least into the current year. Those SMBs that have been doing business on Main Street for more than 20 years are experiencing a decline in growth compared to younger businesses.

In 2024, just 27% of Main Street SMBs that have been in business for more than two decades reported an increase in revenues. Meanwhile, 67% of Main Street SMBs that have been in business for less than five years reported revenue bumps.

Relatively larger main street firms have been main stays of the economy, and have shown they have staying power. We found that 61% of Main Street SMBs with 26 or more employees saw somewhat or much greater revenue in 2023. 64% of companies with six to 25 staffers also saw a bump in revenue during that time. However, only 35% of these SMBs with five or fewer employees reported increased revenue.

The Importance of Payments Acceptance

In an omnichannel world, payments acceptance can be a key competitive differentiator, even as online sales have grown.

The data shows that SMBs that broadened the types of payments they accepted — for both in-store and online sales — did better than those with narrower payment options. The Main Street SMBs reporting growth in 2023 accepted an average of 6.4 payment types, while those reporting decreasing revenues last year accept 4.7 payment types.

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