78% of US business owners anticipate revenue growth in the coming year

Nearly four out of five (78%) small and mid-sized business owners anticipate revenue growth in the next 12 months. This level of confidence spans most business owners, with 76% of women, 82% of Hispanic-Latino, 84% of Black/African American and 83% of Asian American and Pacific Islander (AAPI) entrepreneurs anticipating revenue growth in the year ahead.

This is according to the 2024 Bank of America Women & Minority Business Owner Spotlight, published in partnership with Bank of America Institute. The survey of more than 2,000 small and mid-size business owners across the country explores sentiments about business outlook, access to capital, how they manage their employees, and how they interact with their community. This annual survey samples a general population of small and mid-sized business owners and includes specific insights into the perspectives of women, Hispanic-Latino, Black/African American and AAPI business owners.

“These businesses are the heart of the US economy and business owners are expecting to increase their revenue in the coming year, despite continued concerns around inflation,” said Raul Anaya, president and co-head of Business Banking for Bank of America. “Many also plan to hire and invest in employee education, such as training and mentoring programmes, as they prioritise their labour force and explore opportunities for growth.”

Business owners across all surveyed cohorts are cautiously optimistic that economies will improve over the next 12 months. Nationwide, 66% believe the local economy will improve, 60% believe the national economy will improve, and 57% believe the global economy will improve.

However, data suggests that smaller employers are less optimistic. Some 78% of mid-sized business owners plan to expand and 61% plan to hire over the next year, while just 50% of small business owners plan to expand and 39% plan to hire.

This divergence across business size aligns with Bank of America Institute’s September Small Business Checkpoint, which found lower confidence among smaller businesses compared to their larger counterparts. However, consistent with the survey finding that business owners are continuing to expand their businesses, the Small Business Checkpoint showed continued payroll growth and elevated hiring demand compared to 2019. Beyond hiring concerns, business owners across the country identified inflation and the political environment as top issues.

Over half (57%) of women business owners plan to expand their business in the year ahead. Their expansion strategies include growing their customer base (65%), creating an online presence (48%), and utilising professional services (35%).

Even with expansion goals in mind, 54% of women business owners increased their prioritisation of their work-life balance over the past year. Women measure their work-life balance through having time to take care of personal responsibilities (71%) and feeling like they have enough energy to accomplish everything they want (62%). As they balance their life priorities and business needs, most women feel they have the support they need to grow their businesses.

Hispanic-Latino business owners report strong confidence in the economy. Of these business owners, 76% expect the national economy to improve over the next year and plan to obtain funding (94%) and hire more employees (64%). Some 78% plan to expand their businesses over the coming year.

Black/African American business owners are optimistic about their success in the year ahead and report strong business and economic outlooks. Over the coming year, 77% plan to expand, and 94% plan to obtain funding for their businesses.

 

The probability of a US recession has fallen

The likelihood of a US recession in the coming year has declined amid signs of a still-solid job market, according to Goldman Sachs Research. The bank’s economists say there is a 15% chance of recession in the next 12 months, down from their earlier projection of 20%. That's in line with the unconditional long-term average probability of 15%, according to Jan Hatzius, head of Goldman Sachs Research and the firm's chief economist, in the team's report.

The most important reason for the forecast change is that the US unemployment rate fell to 4.051% in September — below the level in July, when the rate jumped to 4.253% and marginally below the June level of 4.054%. The unemployment rate is also below the threshold that activates the “Sahm rule,” which identifies signals that can indicate the start of a recession. The rule is triggered when the three-month average US unemployment rate increases by 0.50% or more from its low during the previous 12 months.

Recent employment data brings job market signals into line with broader economic growth signals. Real GDP grew 3% in the second quarter and an estimated 3.2% in the third quarter. The strong economic activity data and the recent rebound in oil prices on fears of escalation from the Middle East conflict have not changed Goldman Sachs Research’s conviction that inflation will cool further.

If US Federal Reserve officials had known what was coming, the Federal Open Market Committee might have cut rates by 25 basis points on September 18 instead of 50 basis points, Hatzius wrote. But that doesn’t mean it was a mistake. “We think the FOMC was late to start cutting, so a catch-up that brings the funds rate closer to the levels of around 4% implied by standard policy rules makes sense even in hindsight,” Hatzius noted.

The latest jobs data strengthens Goldman Sachs Research’s conviction that the next few FOMC meetings (including 6-7 November) will bring smaller 25 basis point cuts. The firm’s economists expect the Fed to reduce rates to a terminal funds rate of 3.25% - 3.5%.

 

Basel Committee publishes 2023 banking turmoil and liquidity risk progress report

The Basel Committee on Banking Supervision has published a progress report to the G20 Finance Ministers and Central Bank Governors on its analytical work of the 2023 banking turmoil. The report, requested by the G20 Brazilian Presidency, provides an update on the Committee's analytical work on liquidity risk dynamics observed during the turmoil. It builds on the Committee’s stocktake report published in October 2023.

The progress report includes an updated empirical analysis of the liquidity outflow rates experienced by distressed banks during the turmoil and assesses the materiality of liquidity risk factors that are not explicitly covered by the Basel III Liquidity Coverage Ratio (LCR). The report also analyses the impact of the accounting treatment and valuation of liquid assets eligible to meet the LCR and other potential impediments to banks' ability and willingness to draw down their liquidity buffer. It also assesses the use and role of supervisory monitoring tools and other stress indicators.

Drawing on the findings of this progress report, the Committee is continuing to pursue a series of follow-up initiatives related to the turmoil, including:

• Prioritising work to strengthen supervisory effectiveness and identify issues that could merit additional guidance at a global level.
• Pursuing additional follow-up analytical work based on empirical evidence to assess whether specific features of the Basel Framework, such as liquidity risk and interest rate risk in the banking book, performed as intended during the turmoil and assess the need to explore policy options over the medium term.

This follow-up work is fully in line with the imperative of implementing the Basel III standards in a full and consistent manner, and as soon as possible. 

 

EPC publishes first VoP scheme rulebook

Following a public consultation, the European Payments Council (EPC) has officially issued the first version of the Verification of Payee (VoP) scheme rulebook. This rulebook is designed to support payment service providers (PSPs) across the Single Euro Payments Area (SEPA) in meeting the new regulatory requirements outlined in the EU Instant Payments Regulation (IPR) amending the SEPA Regulation. For the time being, and to allow PSPs in the European Economic Area (EEA) to comply with the new regulatory requirements within the given deadlines, the first VoP rulebook limits itself to verifications of a payee related to a SEPA Credit Transfer (SCT) or a SEPA Instant Credit Transfer (SCT Inst). Future versions of the VoP scheme rulebook could cover other payment instruments as well, depending on market needs or interest.

The first VoP scheme enhances payment security by allowing the PSP of the payer (Requesting PSP) to send an instant request to the payee’s PSP (Responding PSP) to verify the payee’s International Bank Account Number (IBAN) against the name of the payee, or against other identifiers such as Value-Added Tax (VAT) numbers or Legal Entity Identifiers (LEI).

As part of this process, the Responding PSP instantly checks whether the provided details match its records and replies with a VoP response (e.g., match, no match, close match with the name of the payee, or verification check not possible). The entire process is designed to happen as quickly as possible and in any case to take no more than five seconds, improving payment security and reducing fraud risk for consumers and businesses across Europe.

The EPC also published 423 comments from 46 contributors submitted during the public consultation on the proposed VoP scheme rulebook, as well as 116 comments from 30 contributors on the EPC’s recommendations for the matching processes, along with the VoP Task Force's responses. Following this public consultation, the EPC is also publishing the first version of the EPC recommendations for the matching processes under the VoP scheme rulebook.

Also, the VoP Application Programming Interface (API) specifications and the updated API Security Framework document will be released before the end of October 2024. Additionally, the EPC plans to communicate soon additional information about how to achieve reachability and interoperability for VoP scheme at EEA level, including mandatory registration in the EPC Directory Service (EDS) and use of it, and about VoP adherence process.

 

StanChart launches sustainable finance variants of borrowing base trade loan

Standard Chartered has launched sustainable finance variants of its borrowing base trade loans (BBTL). The solution will be available in the US, UK, UAE, South Africa, Singapore and Hong Kong. Further market launches are expected in the future.

The BBTL is a secured revolving credit facility structured to meet the specific financing requirements of businesses, especially those in the commodity sector. BBTL allows businesses to obtain financing against a diverse pool of collateral, typically cash, inventory, or receivables. This helps them to manage their working capital more effectively. The financing amount is directly tied to the borrowing base and varies according to the client’s needs. This structure allows clients to consolidate multiple transactions under a single loan, simplifying their trade financing and leveraging their existing assets for secure and efficient funding.

The sustainable finance variants of the BBTL integrate environmental, social and governance (ESG) criteria into the financing process. These variants include recognition of facilities that support the trade of eligible materials within the applicable borrowing base. For example, financing of critical metals that support energy transition or where the purpose of the financing supports qualifying activities in Standard Chartered’s Green and Sustainable Product Framework (GSPF).

The sustainability-linked variants offer differential pricing for companies demonstrating a commitment to and delivery of material and ambitious sustainability-related key performance indicators (KPIs) and associated targets. Such KPIs include reducing carbon emissions, increasing the share of renewable energy within their energy supply or improving diversity among their management teams.

“By integrating sustainability variants into our BBTL solution, we’re helping to empower our clients to adopt more sustainable practices,” said Sofia Hammoucha, Global Head of Trade & Working Capital at Standard Chartered. “This aligns with our commitment to offering finance to help facilitate our clients’ transition towards more sustainable business practices.”

 

Lakeside Bank adds real-time payments with Volante Technologies

Lakeside Bank, a community bank that specialises in serving mid-sized and larger businesses in Chicago, has selected Volante’s Payments as a Service (PaaS) to enhance its Swift messaging and to implement end-to-end real-time payments via RTP from The Clearing House and FedNow from the Federal Reserve.

Selecting Volante as a strategic partner follows a period of rapid growth for Lakeside, which saw 16.5% net asset growth from 2022 to 2023. The Treasury Management division added a record number of new clients during this period.

To build on this momentum, Lakeside started its payments modernisation collaboration with Volante with Swift pre-processing to ensure ISO 20022 compliance for cross-border payments ahead of upcoming deadlines. The partnership is now focused on the deployment of real-time payments with RTP, marking a significant advancement in Lakeside’s ability to offer best-in-class real-time treasury services to its customers.

Lakeside Bank’s commercial clients are increasingly focused on optimising cash flow, enhancing liquidity management, and mitigating risk. Lakeside identified Volante as a treasury management services partner that helps the bank embrace new technology, expand its digital payment solutions, and offer customers more advanced real-time data analytics tools.