BizSugar.com › Finance › Sole Proprietors’ Interest Expenditures in Long Term Decline

Small business owners are paying a lot less to borrow money now than they did three decades ago.
That’s based on analysis of Internal Revenue Service (IRS) data. Per the IRS, the average sole proprietor paid four times as much on interest expense in 1983 as in 2011, when the numbers are measured in inflation-adjusted terms.
Although some of this decline in the amount of interest payments results from a reduction in the size of the average sole proprietorship, spending on interest has also declined as a fraction of sole proprietors’ sales. As the figure below shows, interest expense at sole proprietorships decreased from 2.1 percent of revenues in 1983 to 1.0 percent in 2011, the most recent year data are available.