Small Business Credit Survey

Established in 2010 by the New York Fed, the Small Business Credit Survey (SBCS) is a survey of firms reporting information about business performance, financing needs and choices, and borrowing experiences. The SBCS captures the perspectives of businesses with fewer than 500 employees and results are weighted to reflect the full population of small businesses in the covered states.

As of 2016, the survey is conducted on a national scale with involvement from all 12 Federal Reserve Banks and a diverse network of more than 400 community and business groups throughout the county with input collected across all 50 states and the District of Columbia.

Responses over time

• In 2017, over 13,700 responses were received, of which 8,169 were from employer firms.
• In 2018, over 12,400 total responses were received, of which 6,614 were from employer firms.
• In 2019, over 9,500 responses were received, of which 5,514 were from employer firms.
• In 2020, over 15,000 responses were received, of which 9,693 were from employer firms.

The survey covers several key areas:

• Firm performance and challenges: Changes in annual revenue, number of employees, outlook for the business, challenges facing the business.
• Financing and credit: Sources of financing, credit products utilized, experiences applying for and obtaining credit.
• Demographic information: Firm zip code, industry, size, number of employees, etc.

Results of the survey, conducted annually late in the third and fourth quarter, help policymakers, service providers, and lenders to better understand the changing dynamics in the small business credit environment.

The “Small Business Credit Survey: 2022 Report on Employer Firms” is based on results from the 2021 Small Business Credit Survey. The report offers a view into what has been an uneven economic recovery for small businesses. Many small businesses have not recovered to prepandemic levels, in terms of both revenue and employment, with the effects of the pandemic hitting disproportionately hard among firms in the leisure and hospitality sector, smaller firms, and firms owned by people of color. Personal funds and cash reserves remain an important source of financial stability for small businesses, while financing approval rates continue to decline relative to prepandemic levels.

Additional analyses from the 2021 Small Business Credit Survey will be released throughout 2022 at FedSmallBusiness.org.

The “Small Business Credit Survey: 2021 Report on Employer Firms” was based on results from the 2020 Small Business Credit Survey. The publication of this report examined the toll the COVID-19 pandemic took on small businesses in 2020. At the time the survey was fielded, six months into the pandemic, closures, layoffs, depressed revenue, and uncertainty continued to plague small businesses across the country. Small business debt mounted and business owners plowed their personal savings into their firms to keep them afloat. This survey focused on firms with between one and 499 employees that were still in business when the survey was fielded; it did not include businesses that were permanently closed.

Additional analyses from the 2020 Small Business Credit Survey were released throughout 2021 at FedSmallBusiness.org.

The “Small Business Credit Survey: 2020 Report on Employer Firms” was based on results from the 2019 Small Business Credit Survey. The publication of this report came at a particularly challenging time for our nation’s small business sector. Small businesses across the country were grappling with the profound impact of the COVID-19 pandemic on their operations and on their owners’ and employees’ livelihoods. As policymakers and service providers began to enact programs to help firms weather the economic challenges, insights about the financial position of small businesses businesses provided a useful perspective on how best to target funds and services. The Federal Reserve Banks’ Small Business Credit Survey (SBCS), fielded in Q3 and Q4 of 2019, offered baseline data on the financing and credit positions of small firms before the onset of the crisis. The survey findings provided insights into firms’ preparedness to withstand the shock, their existing debt levels, and the actions they could have taken in response to an unexpected loss of revenues.

The results of the survey raised several important considerations in the current environment: most firms were ill prepared for a sustained period of revenue loss; firms’ reliance on personal funds could have caused severe repercussions for those individuals and households in the event of failure; and many small businesses did not rely on traditional banks for credit, and, therefore, any program designed to support them should have taken that into consideration.

Additional analyses from the 2019 Small Business Credit Survey were released throughout 2020 at FedSmallBusiness.org.

Employer Firms

The “Small Business Credit Survey: 2019 Report on Employer Firms” examines the findings of the 2018 Small Business Credit Survey, an annual survey of small business owners nationwide. The report focuses on small employer firms, businesses that have between 1 and 499 full- or part-time payroll employees (hereafter “firms”). The survey was fielded in the third and fourth quarters of 2018, collecting 12,455 responses in total, 6,614 of which were from employer firms. Experiences from firms across all 50 states and the District of Columbia, through the joint efforts of the Federal Reserve Banks of New York, Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City, Minneapolis, Philadelphia, Richmond, San Francisco and St. Louis, are included in the report.

Key findings include:

Performance and Expectations

• The share of firms reporting revenue and employment growth increased from 2017, but the share of firms operating at a profit remained flat.
• Expectations for 2019 are mixed with a majority of firms (72%) expecting revenues to increase but 44% planning to add employees.

Financial Challenges and Reliance on Personal Finances

• Nearly two-thirds of firms (64%) continued to experience financial challenges, including difficulties with managing operating expenses, scarcity of credit and challenges making debt payments.
• Two-thirds of these firms (66%) relied on personal finances to cover their costs, while 40% of firms took out additional debt.

Financing Demand, Approvals and Sources

• Respondents showed consistent year-over-year demand for new financing, with 43% of firms applying for new capital in 2018, similar to 40% in 2017.
• Nearly half of applicants (47%) received the full amount of funding they requested, similar to the 2017 survey.
• Financing shortfalls were particularly pronounced among firms with weak credit profiles, unprofitable firms, younger firms and firms in urban areas.
• Applications to online lenders continued their growth trend with 32% of applicant firms turning to such lenders in 2018, up from 24% in 2017 and 19% in 2016. These applicants expected online lenders would make faster funding decisions, would be more likely to provide funding and would not require collateral.
• Applicants who sought funding at large and small banks cited an existing relationship as the primary factor in their choice of lender.

Additional analyses from the 2018 Small Business Credit Survey will be released throughout 2019 at FedSmallBusiness.org.

Nonemployer Firms

The “2019 Small Business Credit Survey Report on Nonemployer Firms” examines the business conditions and the credit environment of small businesses with no employees other than the business’s owners. The report is based on the Small Business Credit Survey (SBCS) that was fielded in 2018. Nonemployer firms represent 81% of all small businesses and can include gig workers, startups that are planning to hire employees and mature businesses that rely on contract workers as their workforce, among others.

Key findings from the report include:

• Nonemployer firms are an important income source for their owners. Nearly two-thirds of nonemployer firms (63%) serve as the primary source of income for their owner(s).
• One in 5 nonemployer firms was started because the owner lacked other employment options.
• Despite their owners’ reliance on the firm for income, a majority of nonemployer firms are either unprofitable or are operating at break even.
• One in 4 nonemployers anticipates hiring employees in the future.
• Nonemployer firms seeking capital face significant obstacles, with more than half experiencing financing shortfalls.

The report includes experiences of firms from across all 50 states and the District of Columbia through the joint efforts of the Federal Reserve Banks of New York, Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City, Minneapolis, Philadelphia, Richmond, San Francisco and St. Louis. The 2018 SBCS collected 12,455 responses in total, 5,841 of which were from nonemployer firms. For more information, please visit FedSmallBusiness.org.

Employer Firms

The “2017 Small Business Credit Survey: Report on Employer Firms” was recently issued by the 12 Federal Reserve Banks. The Report examines the results of an annual survey of small business owners nationwide and focuses on employer firms with fewer than 500 employees.

The report found:

• Firms’ profitability, revenue growth and employment growth improved.
• Optimism about future performance reached its highest level in several years.
• More firms received all of the financing requested.
• A significant portion of firms did not apply for credit because they already had sufficient financing.
• Lower revenue generating firms, startups and those in the leisure and hospitality industry continued to struggle acutely with financing challenges.

You can find more information on the  Reserve Banks’ new website, FedSmallBusiness.org, which serves as a hub for small business research and analysis.

Nonemployer Firms

The "2017 Small Business Credit Survey Report on Nonemployer Firms" examines the business conditions and the credit environment of nonemployer firms—small businesses with no full-time employees other than the business’s owners. Nonemployer firms can include gig workers, startups that are planning to hire employees, and mature businesses that rely on contract workers as their workforce, among others.

Although nonemployer firms make up about 80% of all small businesses and employ 17% of the American workforce, little is known about their financing experiences. This report intends to address this knowledge gap by providing a deeper understanding of the unique characteristics of nonemployer firms and the challenges they face.

A key feature of this report is a deep-dive into five different categories of nonemployer firms based on the nature of their work. This includes “supplemental work” where the business is not the owner’s primary source of income, as well as contract work.

Fifth District Report

The 2017 Small Business Credit Survey: Report on Employer Firms in the Fifth District presents results for the Fifth District overall, as well as for Maryland, North Carolina, South Carolina, and Virginia individually. The District of Columbia and West Virginia were not included in this analysis due to small sample sizes. We found that the majority of Fifth District employer firms have been operating for fewer than six years, have fewer than five employees, operate in the service industry, have low credit risks, and earn under $1 million in revenue. In addition, they are more optimistic about future growth and more likely to use contract workers. On average, Fifth District firms received or were approved for at least some of the financing for which they applied.

Employer Firms

The Employer Firm Report presents findings on the business conditions, financing needs and access to capital based on the responses of 10,303 employer firms from all 50 states and the District of Columbia.

Key Findings:

• Although many employer small businesses were profitable and optimistic, a significant majority faced financial challenges, experienced funding gaps and relied on personal finances.
• These issues were even more pronounced for the smallest firms, which were less likely to receive necessary funding and more likely to rely on personal finances to operate.
• These findings highlight small businesses’ obstacles to growth and raise new questions about how to overcome them.

The results are weighted to reflect the full population of small businesses nationally. The survey is not a random sample; therefore, results should be analyzed with awareness of potential methodological biases.

Full report

Survey Questionnaire

Report Appendix

Fifth District Report 

2016 Small Business Credit Survey: Report on Employer Firms in the Fifth District
pdf report

This report presents results for the Fifth District overall, as well as for Maryland, North Carolina, South Carolina, and Virginia individually. The District of Columbia and West Virginia were not included in this analysis due to small sample sizes. We found that the majority of Fifth District employer firms are under 10-years-old, have fewer than five employees, operate in the service industry, have low credit risks, and earn under $1 million in revenue. In addition, they are more optimistic about future growth, more likely to use contract workers and more likely to receive funding from large banks compared to their counterparts across the country.

Startup Firms

2016 Small Business Credit Survey: Report on Startup Firms

Minority-owned Firms

2016 Small Business Credit Survey: Report on Minority-owned Firms
pdf report | appendix data

This report is the third in a series of reports based on the 2016 SBCS, offering unique insight into important, often underserved, segments of the small business population. Results show that minority-owned firms are discouraged (i.e., they did not apply for new funding because they did not think they would be approved) at much higher rates than nonminority-owned firms. In addition, while not controlling for all firm characteristics, the reported credit outcomes of survey respondents differ by race and credit risk.

Microbusinesses 

2016 Small Business Credit Survey: Report on Microbusinesses: Nonemployer and Small Employer Firms 
pdf report | appendix

The fourth in a series of reports based on the 2016 Small Business Credit Survey (SBCS), this report details findings on the financing experiences and outcomes of the smallest firms in the US. Microbusinesses—a category of small firms comprising both nonemployer firms and firms with fewer than 5 employees—account for 9 in 10 firms in the US. The SBCS finds that microbusinesses face greater challenges than larger small firms and are less able to access financing.

Women-owned Firms

2016 Small Business Credit Survey: Report on Women-owned Firms
pdf report

The fifth in a series of reports that examine the results of an annual survey of small business owners, this report focuses on small businesses that had majority female ownership—51% or more ownership by women—and employees in 2016 (hereafter “women-owned firms”). It compares these firms’ experiences with those of majority men-owned firms (“men-owned firms”). Women-owned firms were found to more likely stay small in terms of revenue and employment, struggle with profitability and be concentrated in less capital-intensive industries. In financing these small businesses, women-owned firms were more likely to face growth-related financial challenges, hold smaller amounts of debt and have unsecured debt. Though women- and men-owned firms applied for credit at similar rates, women-owned firms were less successful in obtaining financing. Among non-applicants, women-owned firms were more often discouraged from applying and less likely to have sufficient credit.

Rural Employer Firms

2016 Small Business Credit Survey: Report on Rural Employer Firms
pdf report

This Report on Rural Employer Firms compares the business and financing conditions of small employer firms located in rural areas to those located in urban areas. It is the sixth in a series of reports based on the 2016 Small Business Credit Survey (SBCS), an annual survey of small business owners. Compared to firms located in urban areas, results show that firms in rural areas are more stable and face less financing constraints. Small banks play a bigger role in rural areas, too.

Employer Firms

The Employer Firm Report presents findings on the business conditions, financing needs and access to capital based on the responses of 3,459 employer firms from a 26 state coverage area.

Key Findings:

• Half of applicants received all the credit sought.
• Newer and smaller firms were more likely to report credit shortfalls.
• Cash flow was the top business challenge for small firms.
• Small banks are the lender of choice.
• Online lenders are a common source of financing – but have lowest borrower satisfaction levels.

Results are weighted to reflect the full population of small businesses in the 26 states of coverage: New York, Florida, Massachusetts, North Carolina, Georgia, Ohio, Pennsylvania, Arkansas, Tennessee, Alabama, Connecticut, Illinois, Indiana, New Jersey, Kansas, Mississippi, Missouri, South Carolina, Virginia, Kentucky, Louisiana, Maine, Maryland, California, Colorado and Texas.

Full Report

Data

Survey Questionnaire

Self-Employed

2015 Small Business Credit Survey: Report on Nonemployer Firms

Key Findings:

• Large differences in credit demand exist between small and larger revenue firms.
• Small businesses applying for credit are likely to be experienced in acquiring financing and operating at a profit.
• Among applicants, there is a strong demand for small loans of $100,000 or less, with many firms borrowing to expand.
• A tough credit market exists for the smallest firms and startups, with a majority unable to secure any credit.
• Large banks are the dominant credit sources, but the use of online lenders is common across firm segments.

Results are weighted to reflect the full population of small businesses in the ten states of coverage: Alabama, Connecticut, Florida, Georgia, Louisiana, New Jersey, New York, Ohio, Pennsylvania and Tennessee.

Full Report

Data

Survey Questionnaire