As Small Business Owners Begin Post-Election Planning for 2025, KeyBank Poll Finds Taxes, Regulations and Trade Policies are Top of Mind

Rhea-AI Summary

A KeyBank Small Business Flash Poll reveals that 61% of small business owners delayed major business decisions until after the election. The survey identified top concerns for 2025: taxation (45%), regulations (34%), and trade policies (31%). Despite challenges, 32% plan to expand staff in 2025. The poll also highlighted impacts of higher interest rates, with 38% facing reduced profit margins and 37% experiencing increased borrowing costs. However, 56% expect future interest rate changes to positively impact their businesses. Business owners have adapted by increasing cash reserves (43%), reducing debt reliance (37%), and diversifying funding sources (32%). The survey included 1,796 U.S. small business owners with annual revenue under $10 million.

Positive

• 32% of small businesses plan to expand staff in 2025
• 56% expect positive impact from future interest rate changes
• 43% have increased cash reserves as adaptation strategy
• 37% reduced debt reliance showing financial prudence

Negative

• 38% faced reduced profit margins due to high interest rates
• 37% experienced increased borrowing costs
• 31% deferred capital investment due to high interest rates
• 61% delayed major business decisions due to election uncertainty

Insights

Market Research Analyst

This survey reveals significant insights into small business sentiment and strategic planning heading into 2025. The 61% of businesses delaying major decisions until post-election signals widespread caution in the SMB sector. The focus on taxation (45%), regulations (34%) and trade policies (31%) highlights key areas of business concern that could impact KeyBank's commercial lending portfolio.

The data on interest rate impacts is particularly telling - while 38% faced reduced margins and 37% saw increased borrowing costs, the 56% expecting positive outcomes from rate changes suggests an adaptable business community. The trend toward increasing cash reserves (43%) and reducing debt reliance (37%) indicates a shift in business banking behavior that could affect KEY's lending volumes and deposit base in 2025.

Financial Analyst

For KeyBank, this survey data presents both opportunities and challenges. The 32% of businesses planning staff expansion suggests potential growth in commercial lending, while the trend toward cash preservation could boost deposit balances. However, the 37% reducing debt reliance could pressure loan growth targets.

The bank's $190 billion asset base and extensive branch network position it well to capitalize on businesses seeking diversified funding sources (32% of respondents). The focus on building cash reserves among SMBs could benefit KEY's deposit-gathering efforts, though reduced appetite for debt and deferred capital investments may impact near-term lending revenue.

Poll also found many are preparing for growth, including hiring

CLEVELAND, Nov. 14, 2024 /PRNewswire/ -- With the election now behind us, many business owners are planning for 2025. A recent KeyBank Small Business Flash Poll found 61% of respondents indicated they were likely to seek clarity and hold off on major business decisions until after the election, while only 12% said the election would have no impact on their 2025 planning. The poll also found business owners anticipate policy shifts will most affect areas such as:  

• Taxation (45%)
• Regulations (34%)
• Trade policies (31%)

Despite challenges posed by pre-election uncertainty surrounding anticipated policy changes, small business owners are preparing for growth, with nearly one-third (32%) expecting to expand their staff in 2025.

"Small business owners faced many challenges in 2024, including political uncertainty," said Mike Walters, President of Business Banking at KeyBank. "Despite challenges, they've displayed great resilience and patience navigating an election year. As they plan for 2025, it is important that they talk with their banker to develop strategies and explore solutions that can help them adapt to and persevere through potential policy shifts and changes."

KeyBank's recent Small Business Flash Poll also showed higher interest rates have impacted small business owners in many ways, including:

• 38% of respondents faced reduced profit margins
• 37% faced increased borrowing costs
• 31% have deferred capital investment due to high interest rates

At the same time, more than half of respondents (56%) expect interest rate changes to positively impact their businesses. The poll found they've adapted to the rate environment by increasing cash reserves (43%), reducing reliance on debt (37%), and diversifying funding sources (32%).

Methodology
This survey was conducted online by Survey Monkey, including 1,796 respondents, ages 18-99, located in the United States, who own or operate a small-to-medium size business with an annual gross revenue of less than $10 million, completed the survey in August 2024.

ABOUT KEYCORP
KeyCorp's (NYSE: KEY) roots trace back nearly 200 years to Albany, New York. Headquartered in Cleveland, Ohio, Key is one of the nation's largest bank-based financial services companies, with assets of approximately $190 billion at September 30, 2024. Key provides deposit, lending, cash management, and investment services to individuals and businesses in 15 states under the name KeyBank National Association through a network of approximately 1,000 branches and approximately 1,200 ATMs. Key also provides a broad range of sophisticated corporate and investment banking products, such as merger and acquisition advice, public and private debt and equity, syndications and derivatives to middle market companies in selected industries throughout the United States under the KeyBanc Capital Markets trade name. For more information, visit https://www.key.com/. KeyBank Member FDIC. 

CFMA #241111-2881834

This material is presented for informational purposes only and should not be construed as individual tax or financial advice. KeyBank does not provide legal advice. Key.com is a federally registered service mark of KeyCorp. ©2024 KeyCorp

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SOURCE KeyBank

FAQ

What are the top concerns for small businesses in 2025 according to KeyBank's poll?

According to KeyBank's poll, the top concerns for small businesses in 2025 are taxation (45%), regulations (34%), and trade policies (31%).

How have high interest rates affected small businesses according to KeyBank's 2024 survey?

High interest rates led to reduced profit margins (38%), increased borrowing costs (37%), and deferred capital investments (31%) among small businesses.

What percentage of businesses plan to hire in 2025 according to KeyBank's poll?

According to KeyBank's poll, 32% of small businesses expect to expand their staff in 2025.

How have small businesses adapted to the current rate environment according to KEY's survey?

According to the survey, businesses have adapted by increasing cash reserves (43%), reducing reliance on debt (37%), and diversifying funding sources (32%).