Poll: Small businesses in Mass. say it's hard to hire and get capital

Many small businesses across Massachusetts want to grow but say it's difficult to fill open jobs and access capital, according to a new survey released Tuesday from MassInc Polling Group.

The poll is the third iteration of a survey meant to take the pulse of small businesses in the state. The MassInc Polling Group surveyed 1,818 small business leaders about their operations and outlook. Here are three takeaways from the poll:

Small businesses want to expand in the next few years

Business leaders say they're looking for ways to grow and expand. Overall, 84% say increasing sales and revenue is a major priority and 77% say finding new customers is a priority, according to the poll.

"There's definitely pent up energy for businesses looking to expand, looking to do things like open new locations or buy new equipment, hire more people and that sort of thing," MassINC president Steve Koczela told WBUR. "We found that energy is actually particularly focused among Black and Latino business owners."

But as small businesses look to grow, there is a potential area of concern: Retirement. As business leaders age, there could be a wave of retirements in the coming years, according to MassINC. But, overall, only 22% of businesses report having a succession plan in place, the poll found.

High costs make it harder for businesses to hire

Most small business leaders polled — 61% — say they have one or more open positions to fill. These leaders say business conditions are better now than they were in 2022, but major obstacles to hiring remain — namely the high cost of living and the high cost of housing. According to the poll, 67% of business leaders cited the cost of living and 65% cited the cost of housing as obstacles to hiring and retaining employees. Those costs put pressure on wages, according to MassINC. And 65% of employers said potential hires want more money than what they offer.

"If you're having to pay for the high cost of housing, or just the high cost of living in Massachusetts in general, then you're going to request higher wages, higher salaries," Koczela said. "And that's another issue that small business owners say they're facing."

Access to capital varies for small businessowners

Gaining access to capital is critical as small businesses in the state look to buy equipment, cover costs, hire and expand their operations. But the poll found a gap in financing — 47% of white-owned businesses say they received all the capital they applied for while just 35% of Asian-owned businesses, 34% of Latino-owned businesses and 31% of Black-owned businesses did.

Black-owned businesses report getting "unfavorable repayment terms" and "outright rejected" at far higher rates than other businesses, according to Koczela.

"Businesses run by entrepreneurs of color are facing more hurdles in accessing capital and the capital market is very tight right now, which makes the problem all that much harder," Koczela said.

He also noted that applying for loans had gotten harder in recent years due to higher interest rates. When MassINC surveyed small businesses in 2022, just 15% said they faced high interest rates — now that number is 50%, Kozcela said.

WBUR's Amy Sokolow contributed to this report.