A report from online lender Biz2Credit claims that SME earnings cratered during the fourth quarter of 2024.
According to the firm, there was a noted decline in activity during December. The Small Business Earnings Report for December 2024 indicates that the average monthly net income was $83,083 in 2024, with average monthly revenue of $747,608. Average monthly expenses were $664,525.
Average monthly earnings were highest in 2024 July at $136,800, which was said to be over $100,000 less than earnings in September 2023 ($237,700), the best month for small businesses during the last three years.
Earnings are said to have topped $100,000 during the summer months of 2024 as follows:
- June ($128,900),
- July ($136,800),
- August ( $130,000)
Earnings exceeded $100,000 during the summer months of 2024: June ($128,900), July ($136,800), August ( $130,000) and September ($105,400).
The downward trend began in July and continued the slide in October ($68,200), November ($49,200), and December ($42,100) of 2023.
Rohit Arora, CEO and co-founder of Biz2Credit, says their research is one of the most precise available.
“The report examines the financial health of small businesses during a year when inflation rates eased from previous levels, but when cost structures rose sharply and continued to remain high.”
Arora said that inflation growth has been trending lower, but the overall cost for SMEs has increased, and they have struggled to raise prices sufficiently to make up the difference.
“The cost of rents, insurance, and equipment have soared, as has the cost of labor. Further, businesses that borrowed money often did so at variable rates, so they paid a high cost of capital in 2024. Fortunately for SMB owners, the Federal Reserve has begun to lower rates. Even with lower interest payments, small businesses are operating under many financial pressures, and we are seeing that their profitability was on a steady decline for the second half of 2024,” said Arora.
The Biz2Credit data is gleaned from monthly applications submitted on Biz2Credit’s platform.
