from the New York Fed
Despite the significance of small businesses to the U.S. economy and to local communities, information on small business financing conditions is limited, leaving important knowledge gaps for policymakers and service providers.
To fill those gaps, the Small Business Credit Survey, a collaboration among seven Federal Reserve Banks, including New York, Atlanta, Boston, Cleveland, Philadelphia, Richmond and St. Louis, offers insight about business owners’ financing decisions. The survey focuses particular attention on how credit demand, sources and outcomes vary within the small business sector.
This report focuses on the survey responses of 3,459 employer firms from 26 states. It sheds particular light on three sub-segments – startups, microbusinesses, and growing firms, or those with increasing revenues and employees and plans to increase or maintain their number of employees.
Here are key findings from the survey:
More small businesses reported stronger performance in the 2015 survey than in the 2014 survey.
Employer Firm Performance Index1 | ||
|---|---|---|
| 2014 SURVEY | 2015 SURVEY | |
| Profitability | 15% | 27% |
| Revenue growth | 21% | 26% |
| Employment growth | 14% | 15% |
TABLE NOTES
1 For revenue and employment growth, the index is the share reporting positive growth minus the share reporting negative growth. For profitability, it’s the share profitable minus the share not-profitable.
Cash flow is a common challenge for small businesses. For growing firms, hiring and/or retaining qualified staff is the top challenge.
Top Business Challenge By Type Of Firm | ||||
|---|---|---|---|---|
| ALL FIRMS | GROWING | STARTUP (0-2YEAR) | MICRO (<$100K) | |
| Cash flow | 22% | 23% | 25% | 26% |
| Costs of running business | 19% | 16% | 23% | 22% |
| Credit availability | 9% | 12% | 13% | 13% |
| Government regulations | 10% | 9% | 4% | 4% |
| Hiring and/or retaining qualified staff | 17% | 24% | 15% | 9% |
| Revenues/sales | 13% | 6% | 10% | 16% |
| Taxes | 9% | 8% | 9% | 7% |
| Other | 2% | 3% | 2% | 3% |
While financing success improved in the 2015 survey, half of applicant firms received less than the amount requested.
Application Outcomes By Size Of Firm | ||
|---|---|---|
| FULLY FUNDED | FINANCING SHORTFALL | |
| All firms | 50% | 50% |
| >$10M | 73% | 27% |
| $1M-$10M | 63% | 37% |
| $100K-$1M | 45% | 55% |
| Micro (<$100K) | 37% | 63% |
Traditional bank lending continues to be the primary source of financing for small businesses.
Credit Sources Applied To By Revenue Size Of Firm | |||||
|---|---|---|---|---|---|
| ALL FIRMS | >$10M | $1M-$10M | $100K-$1M | MICRO (<$100K) | |
| Small bank | 52% | 53% | 59% | 52% | 44% |
| Large bank | 42% | 58% | 45% | 39% | 41% |
| Online lender | 20% | 6% | 11% | 22% | 30% |
| Credit union | 9% | 1% | 4% | 9% | 14% |
Online lenders have the lowest borrower satisfaction levels because of concerns with high interest rates and unfavorable repayment terms.
Lender Satisfaction Score 1 | |
|---|---|
| LENDER | SATISFACTION SCORE |
| Small bank | 75% |
| Credit union | 56% |
| Large bank | 51% |
| Online lender | 15% |
| Other | 33% |
TABLE NOTES
1 Satisfaction score is the share satisfied with lender minus the share dissatisfied.
[click here to download the entire report]
Source
https://www.newyorkfed.org/smallbusiness/small-business-credit-survey-employer-firms-2015
