Despite optimism, a new survey from TD Bank suggests that many small business owners may be overestimating their financial readiness.
The inaugural Financial Preparedness Survey: Small Businesses Owners' Report reveals an
eye-opening gap between how confident small business owners (SBOs) feel and how resilient their businesses actually are in the face
of financial stress.
“Now, more than ever, it is critical for business owners to be financially prepared,” said Andy Bregenzer, Co-Head of U.S. Commercial Banking at TD Bank. “Financial preparedness is not just about business survival but also about positioning your business to grow with confidence no matter what the future holds.”
72%
admitted their businesses could only handle revenue shortfalls for two quarters or less.
The illusion of financial readiness
At first glance, owners seem to be on top of their finances, with 99% reporting they evaluate their financial health at least quarterly.
Still, the data shows that many businesses remain vulnerable to even short-term disruptions. This disconnect points to a potential overreliance on superficial indicators of health, rather than robust planning or diversified support systems.
Andy cautions against this kind of complacency.
“Business owners who invest the time to create a financial plan will be better positioned to face challenges and seize new opportunities,” he said.
Medical emergencies are the most important factor influencing financial preparedness among Americans:
Seeking help but not necessarily from the right places
Trusted financial advice is key
The report also underscores the importance of working with trusted financial partners who can offer guidance to small businesses navigating shifting economies. This includes education on financial resources and types of funding, like access to SBA loans, asset-based lending and flexible lines of credit, to support both longer-term purchases and day-to-day operations. In times of uncertainty and frequent change, financial flexibility can allow business owners to respond swiftly.
When attorneys and real estate developers Eric Jenkins and Earle “Chico” Horton envisioned turning a historic building on Washington, D.C.'s former Walter Reed Army Medical Center campus into a neighborhood hardware store, café and offices, they aimed to make it one of their “better places.”
To acquire the building, they faced a unique financing challenge. The project required an innovative blend of New Markets Tax Credits (NMTC) with a U.S. Small Business Administration (SBA) construction-to-permanent loan — a combination most banks couldn't structure.
“TD’s ability to coordinate multiple funding sources made the complex project feasible,” Eric said.
“There were half a dozen times when TD could have walked away from this deal, but they didn't,” he added. “Unlike other banks, TD stood out as having the resources to provide the solutions we needed. They had a super-strong SBA team plus a super-strong New Markets Tax Credit team, which was exactly what we needed.”
This kind of partnership shows the critical role financial institutions can play not just in providing capital, but also in enabling long-term growth and stability.
While 94% of the 1,000 small business owners surveyed said they believe they are financially prepared for the next 12 to 18 months, the numbers tell a different story:
%
52
say positive cash flow is their top marker of financial preparedness.
%
37
believe it’s the ability to weather emergencies through available capital.
43%
said their business would not survive if revenue dropped for three to four consecutive quarters.
“Small business owners don’t have to face challenges alone,” Andy said. “Bankers are true small business experts – we've seen it all, and we know how to help. SBOs who are going at it alone are leaving good advice – and potential opportunities – on the table.”
This hesitancy to engage with financial professionals can be especially risky when it comes to planning for loans or credit.
Although 82% of SBOs are likely to seek a loan or line of credit in the near future—for operations, payroll, or expansion—without sound financial planning and expert consultation, those efforts could fall short.
One of the more surprising takeaways from the report is where small business owners go for guidance:
46%
45%
30%
Hover over each image below to reveal more information.
consult banks or financial institutions.
turn to fellow business owners.
use generative AI tools like ChatGPT for financial insight.
Eric Jenkins and Earle “Chico” Horton
Looking ahead
Despite ongoing concerns about inflation, interest rates, and economic uncertainty, owners remain an optimistic group.
Their resilience, however, will be tested in the months ahead—and preparation, not just perception, will make the difference.
“They work hard for their success, and they deserve a trusted banker who will navigate uncertainty alongside them,” Andy said.
