SMALL BUSINESS CREDIT SURVEY - Report on Employer Firms 2017 - Fed Small Business
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2017
SMALL BUSINESS
CREDIT SURVEY
Report on Employer Firms
F E D E R A L R E S E RV E B A N K S o f
Atlanta • Boston • Chicago • Cleveland • Dallas • Kansas City • Minneapolis
New York • Philadelphia • Richmond • St. Louis • San FranciscoTABLE OF CONTENTS
I ACKNOWLEDGMENTS 19 FIRM SIZE: PERFORMANCE
AND CHALLENGES
III EXECUTIVE SUMMARY
20 FIRM SIZE: DEMAND FOR FINANCING
1 PERFORMANCE 21 FIRM SIZE: CREDIT OUTCOMES
2 GROWTH EXPECTATIONS 22 FIRM AGE: PERFORMANCE
3 FINANCIAL CHALLENGES AND CHALLENGES
4 FUNDING BUSINESS OPERATIONS 23 FIRM AGE: DEMAND FOR FINANCING
5 RELIANCE ON PERSONAL FINANCES 24 FIRM AGE: CREDIT OUTCOMES
6 DEMAND FOR FINANCING 25 INDUSTRY: PERFORMANCE
7 FINANCING RECEIVED 26 INDUSTRY: FINANCIAL CHALLENGES
8 FINANCING SHORTFALLS 27 INDUSTRY: DEMAND FOR FINANCING
28 INDUSTRY: DEMAND FOR FINANCING
9 APPLICATIONS AND CREDIT OUTCOMES
10 LOAN/LINE OF CREDIT SOURCES 29 INDUSTRY: CREDIT OUTCOMES
12 LOAN/LINE OF CREDIT APPROVAL
31 METHODOLOGY
14 LENDER SATISFACTION
34 DEMOGRAPHICS
15 NONAPPLICANTS AND CREDIT USE
16 FINANCIAL CHALLENGES:
NONAPPLICANTS AND APPLICANTS
17 NONAPPLICANT DEBT HOLDINGS
18 NONAPPLICANT LOAN/LINE OF
CREDIT SOURCESACKNOWLEDGMENTS
The Small Business Credit Survey is made possible through collaboration with more than 500 business organizations in communities across
the United States. The Federal Reserve Banks thank the national, regional, and community partners who share valuable insights about
small business financing needs and collaborate with us to promote and distribute the survey.1 We also thank the National Opinion Research
Center (NORC) at the University of Chicago for assistance with weighting the survey data to be statistically representative of the nation’s
small business population.2
Special thanks to colleagues within the Federal Reserve System, especially the Community Affairs Officers3 and representatives from the
U.S. Small Business Administration, Opportunity Finance Network, Accion, and The Aspen Institute for their incisive feedback and support
for this project. Thanks also to Reserve Bank colleagues for their constructive feedback on earlier drafts of the report.4
We particularly thank the following individuals:
Menna Demessie, Vice President, Policy Analysis and Research, Lauren Rosenbaum, Communications Manager, US Network, Accion
Congressional Black Caucus Foundation Mark Schweitzer, Senior Vice President, Federal Reserve Bank
Annie Donovan, Director, CDFI Fund, U.S. Department of the Treasury of Cleveland
Ingrid Gorman, Research and Insights Director, Association Lauren Stebbins, Vice President, Small Business Initiatives,
for Enterprise Opportunity Opportunity Finance Network
Tammy Halevy, Senior Vice President, New Initiatives, Association Jeffrey Stout, Director, State Small Business Credit Initiative,
for Enterprise Opportunity US Department of the Treasury
Gina Harman, Chief Executive Officer, Accion USA Tom Sullivan, Vice President, Small Business Policy, US Chamber
of Commerce
Brian Headd, Chief Economic Advisor, U.S. Small Business
Administration Storm Taliaferrow, Manager of Membership and Impact Assessment,
National Association for Latino Community Asset Builders (NALCAB)
Joyce Klein, Director, FIELD, The Aspen Institute
Richard Todd, Vice President, Federal Reserve Bank of Minneapolis
Joy Lutes, Vice President of External Affairs, National Association
of Women Business Owners Holly Wade, Director of Research and Policy Analysis, National
Federation of Independent Business
Robin Prager, Senior Adviser, Federal Reserve Board of Governors
Alicia Robb, Chief Executive Officer, Next Wave Ventures
1 For a full list of community partners, please visit www.fedsmallbusiness.org/partnership.
2 For complete information about the survey methodology, please see p. 31.
3 Joseph Firschein, Board of Governors of the Federal Reserve System; Karen Leone de Nie, Federal Reserve Bank of Atlanta; Prabal Chakrabarti, Federal Reserve Bank
of Boston; Alicia Williams, Federal Reserve Bank of Chicago; Emily Garr Pacetti, Federal Reserve Bank of Cleveland; Roy Lopez, Federal Reserve Bank of Dallas;
Tammy Edwards, Federal Reserve Bank of Kansas City; Tony Davis, Federal Reserve Bank of New York; Michael Grover, Federal Reserve Bank of Minneapolis; Theresa
Singleton, Federal Reserve Bank of Philadelphia; Sandy Tormoen, Federal Reserve Bank of Richmond; Daniel Davis, Federal Reserve Bank of St. Louis; and David
Erickson, Federal Reserve Bank of San Francisco.
4 Brian Clarke, Federal Reserve Bank of Boston; Emily Engel, Federal Reserve Bank of Chicago; Emily Perlmeter, Federal Reserve Bank of Dallas; Dell Gines, Federal
Reserve Bank of Kansas City; Michou Kokodoko, Federal Reserve Bank of Minneapolis; and Emily Corcoran, Shannon McKay, and Samuel Storey, Federal Reserve Bank
of Richmond.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS iACKNOWLEDGMENTS (CONTINUED)
This report is the result of the collaborative effort, input, and analysis of the following teams:
REPORT TEAM Garvester Kelley, Federal Reserve Bank of Chicago
Jessica Battisto, Federal Reserve Bank of New York Steven Kuehl, Federal Reserve Bank of Chicago
Mels de Zeeuw, Federal Reserve Bank of Atlanta Michou Kokodoko, Federal Reserve Bank of Minneapolis
Claire Kramer Mills, Federal Reserve Bank of New York Lisa Locke, Federal Reserve Bank of St. Louis
Scott Lieberman, Federal Reserve Bank of New York Shannon McKay, Federal Reserve Bank of Richmond
Ann Marie Wiersch, Federal Reserve Bank of Cleveland Emily Mitchell, Federal Reserve Bank of Atlanta
Craig Nolte, Federal Reserve Bank of San Francisco
OUTREACH TEAM
Drew Pack, Federal Reserve Bank of Cleveland
Leilani Barnett, Federal Reserve Bank of San Francisco
Emily Perlmeter, Federal Reserve Bank of Dallas
Bonnie Blankenship, Federal Reserve Bank of Cleveland
Marva Williams, Federal Reserve Bank of Chicago
Jeanne Milliken Bonds, Federal Reserve Bank of Richmond
Javier Silva, Federal Reserve Bank of New York
Nathaniel Borek, Federal Reserve Bank of Philadelphia
Laura Choi, Federal Reserve Bank of San Francisco SURVEY DEVELOPMENT TEAM
Brian Clarke, Federal Reserve Bank of Boston Jessica Battisto, Federal Reserve Bank of New York
Joselyn Cousins, Federal Reserve Bank of San Francisco Brian Clarke, Federal Reserve Bank of Boston
Naomi Cytron, Federal Reserve Bank of San Francisco Emily Corcoran, Federal Reserve Bank of Richmond
Peter Dolkart, Federal Reserve Bank of Richmond Mels de Zeeuw, Federal Reserve Bank of Atlanta
Emily Engel, Federal Reserve Bank of Chicago Claire Kramer Mills, Federal Reserve Bank of New York
Ian Galloway, Federal Reserve Bank of San Francisco Karen Leone de Nie, Federal Reserve Bank of Atlanta
Dell Gines, Federal Reserve Bank of Kansas City Scott Lieberman, Federal Reserve Bank of New York
Jen Giovannitti, Federal Reserve Bank of Richmond Shannon McKay, Federal Reserve Bank of Richmond
Desiree Hatcher, Federal Reserve Bank of Chicago Ellyn Terry, Federal Reserve Bank of Atlanta
Melody Head, Federal Reserve Bank of San Francisco Ann Marie Wiersch, Federal Reserve Bank of Cleveland
Jason Keller, Federal Reserve Bank of Chicago
We thank all of the above for their contributions to this successful national effort.
Claire Kramer Mills, PhD
Assistant Vice President
Federal Reserve Bank of New York
The views expressed in the following pages are those of the report team and
do not necessarily represent the views of the Federal Reserve System.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS iiEXECUTIVE SUMMARY
The Small Business Credit Survey (SBCS), Continued financial challenges—most Firms sought financing most frequently
a national collaboration of the 12 Federal commonly, paying operating expenses and at large banks (48%), small banks (47%),
Reserve Banks, provides timely information wages, and credit availability—for some and online lenders (24%). However, a
on small business financing needs, decisions, firm segments, particularly recent credit notable share (18%) turned to other lend-
and outcomes to policy makers, researchers, applicants, micro firms (≤$100K in annual ers, including auto/equipment dealers,
lenders, and service providers. revenues), startups (0-5 years), and firms farm lending institutions, friends/family,
in the leisure and hospitality industry. nonprofits, private investors, and govern-
The report findings provide an in-depth ment entities.
look at small business performance, debt More detailed findings include the following:
Among nonapplicants, 50% did not apply
holdings, and credit experiences. Fielded in
IMPROVED PERFORMANCE AND because they had sufficient financing.
Q3 and Q4 2017, the survey yielded 8,169
HEIGHTENED OPTIMISM Another 26% were averse to taking on
responses from small employer firms, busi-
debt, and 13% did not apply because they
nesses that have 1 to 499 full- or part-time In 2017, the majority of firms reported
believed they would be turned down.
employees (hereafter “firms”), in the 50 they were profitable and had growing
states and the District of Columbia. New fea- revenues. The net share of firms reporting IMPROVED FINANCING SUCCESS BUT
tures of this year’s report include expanded profitability, revenue growth, and NOTEWORTHY GAPS
time trend information and a detailed look employment growth all increased from
at the credit experiences of firms by various 2016 levels. A larger share of applicants received the
segments including revenue size, age, and full amount of financing requested—46 %
Expectations for revenue and employment in 2017, compared to 40% in 2016.
industry. The survey findings complement
reached their highest levels since 2015.
other national data on aggregate lending Firms also reported higher success rates
Reflective of this optimism, a net 66%
volumes and lender perceptions.1 for loan and line of credit applications,
of firms anticipate revenue growth
in 2018, while a net 44% expect to hire with 58% receiving all of the credit re-
Heading into 2018, small businesses report- quested, up from 53% in 2016.
ed stronger revenue growth and profitability new employees.
but continued financial challenges for some Financing shortfalls—receiving less than
WEAKER DEMAND FOR NEW FINANCING the amount requested—were more com-
segments of firms. Overall, the survey finds:
Demand for financing declined modestly, mon among micro firms (annual revenues
Improved performance in 2017 and with 40% of firms applying for funding, of $100K or less) and startups (0–5
heightened optimism for revenue and down from 45% in 2016. years). Seventy percent of micro firm ap-
employment growth in 2018. plicants and 61% of startups experienced
As in previous years, most applicant firms
shortfalls.
Comparatively weaker demand for new (55%) were seeking $100K or less in
financing, with a smaller share of firms financing; three quarters sought $250K There were other notable funding short-
applying for new capital than in prior years or less. falls that varied across self-reported
and half of nonapplicants reporting that credit-risk categories. Forty-four percent
Though applicants most frequently sought
they had sufficient financing. of firms with low credit risk experienced a
credit for expansion (59%), borrowing
financing gap, compared to 71% of medi-
Improved financing success for applicants, needs also reflected uneven cash flow and
um credit risk firms and 90% of firms with
with a larger share receiving the cost pressures, with sizable shares bor-
high credit risk. Firms most frequently
full amount of financing requested and rowing to fund operating expenses includ-
attributed these shortfalls to insufficient
higher success rates for loan and line of ing wages (43%), and to refinance (26%).
credit histories and insufficient collateral.
credit applicants compared to 2016.
Applicants on average continued to report
A moderate increase in applications a higher incidence of credit risk factors
to online lenders2 overall in 2017, with than nonapplicants: a smaller share were
notably higher application rates among profitable, and larger shares reported low
self-reported medium and high credit credit scores or reported experiencing
risk firms. financial challenges in the prior year.
1 See, for example, the SBA Office of Advocacy’s “Quarterly Lending Bulletin,” the Federal Financial Institutions Examination Council’s (FFIEC) “Consolidated Reports of
Condition and Income” (“Call Reports”), the Board of Governors of the Federal Reserve System’s “Senior Loan Officer Opinion Survey on Bank Lending Practices,” and
Kansas City Federal Reserve Bank “Small Business Lending Survey.”
2 The survey questionnaire asks about a range of nonbank online providers, including retail/payments processors, peer-to-peer lenders, merchant cash advance lenders,
and direct lenders. For purposes of topline findings, nonbank online lenders are grouped into one category, “online lenders.”
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS iiiEXECUTIVE SUMMARY (CONTINUED)
MODERATELY INCREASED APPLICA- These findings are consistent with net ABOUT THE SURVEY
TIONS TO ONLINE LENDERS satisfaction levels reported by nonapplicant
The SBCS is an annual survey of firms with
debt holders, which ranged from a high of
Applications to online lenders increased fewer than 500 employees. These types of
81% for credit unions to a low of 43% for
to 24% in 2017, up from 21% in 2016. firms represent 99.7% of all employer estab-
online lenders.
lishments3 in the United States. Respondents
This percentage is higher among self- are asked to report information about their
reported medium/high credit risk firms, with CONTINUED FINANCIAL CHALLENGES business performance, financing needs
40% applying to online providers—nearly FOR SOME SEGMENTS and choices, and borrowing experiences.
the same share that applied to large banks Sixty-four percent of firms experienced Responses to the SBCS provide insights on
(49%) and small banks (47%). financial challenges in the last year. the dynamics behind lending trends and
shed light on noteworthy segments of the
Self-reported medium and high credit risk While the most common challenges overall small business population. The SBCS is not
applicants were most successful in obtaining were paying operating expenses (40%) and a random sample; results should be analyzed
funding for loans, lines of credit, or cash credit availability (30%), these challenges with awareness of potential biases that are
advances from online sources; 71% were were particularly acute for firms with annual associated with convenience samples. For
funded at online providers, compared with revenues of $100K or less (52% and 36%, detailed information about the survey design
success rates of 35% at large banks, 47% respectively), and for startups (46% and 39%, and weighting methodology, please consult
at small banks, and 26% at credit unions. respectively). the Methodology section.
Applicants to online lenders report being For leisure and hospitality firms, 48% re- Given the breadth of the 2017 survey
attracted by the speed of credit decisions, im- ported difficulty paying operating expenses, data, the SBCS can shed light on various
proved funding chances, and lack of collateral and another 38% had difficulty making pay- segments of the small business popula-
requirements. Net borrower satisfaction with ments on debt; these shares are higher than tion, including startups and growing firms,
online providers has also increased from 19% for firms in other industries. microbusinesses, minority-owned firms,
in 2015 to 35% in 2017.
women-owned firms, and self-employed
Firms most often addressed financial chal-
However, applicants to online lenders cited individuals (nonemployer firms). Future
lenges by using personal funds—67% of
challenges with high interest rates and un- reports will focus on the financing needs
business owners used personal finances to
favorable repayment terms more often than and experiences of some of these segments.
do so, and 39% took out additional debt.
applicants to other lenders. Applicants to
online lenders also remain the least satisfied
among applicants at all types of lenders.
3 https://www.sba.gov/sites/default/files/advocacy/SB-FAQ-2017-WEB.pdf
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS ivPERFORMANCE
In 2017, employer firms reported stronger performance than in the
2016 survey.
EMPLOYER FIRM PERFORMANCE INDEX, 1,2 Prior 12 Months (% of employer firms)
31% Profitability
30%
Revenue Growth
Employment Growth
27%
29% 26%
21%
18% 18%
17%
2015 Survey3 2016 Survey3 2017 Survey
4
N = 3,549–3,583 N4=9,929–10,181 N4=8,062-8,393
EMPLOYER FIRM PERFORMANCE, 2017 Survey (% of employer firms)
PROFITABILITY, 5 REVENUE CHANGE, EMPLOYMENT CHANGE,
End of 2016 Prior 12 Months6 Prior 12 Months6
N=7,830 N=7,983 N=7,684
At a profit 57% Increased 53% Increased 35%
Break even 18% No change 22% No change 49%
At a loss 24% Decreased 25% Decreased 16%
1 For revenue and employment growth, the index is the share reporting growth minus the share reporting a reduction. For profitability, it is the share
profitable minus the share not profitable.
2 Approximately the second half of the prior year through the second half of the surveyed year.
3 In order to make time series comparisons, the survey data have been re-weighted to maintain consistency over time. Therefore, the values and observation counts here
may differ slightly from past reports and the appendix file for this report, which uses a different weighting scheme. Please see p. 31 for more detail.
4 Questions were asked separately, thus the number of observations may differ slightly between questions.
5 Percentages may not sum to 100 due to rounding.
6 Prior 12 months. Approximately the second half of 2016 through the second half of 2017.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 1GROWTH EXPECTATIONS
In the 2017 survey, employer firm expectations for future growth
exceeded levels reported in prior surveys.
EMPLOYER FIRM EXPECTATIONS (% of employer firms)
REVENUE CHANGE, 1 Next 12 Months2 EMPLOYMENT CHANGE, Next 12 Months2
N=8,073 N=7,736
Will increase 72% Will increase 48%
No change 19% No change 46%
Will decrease 8% Will decrease 6%
29% of employer Growing firms are defined as those that:
Increased revenues3
Increased number of employees3
firms are growing. P lan to increase or maintain number of employees2
N=7,444
EMPLOYER FIRM EXPECTATIONS INDEX, 4,5 Next 12 Months2 (% of employer firms)
66% R
evenue Growth
63% Expectations
61%
E mployment Growth
Expectations
44%
38% 39%
2015 Survey 2016 Survey 2017 Survey
N6=3,597–3,608 N6=10,187–10,218 N6=8,116-8,484
1 Percentages may not sum to 100 due to rounding.
2 Expected change in approximately the second half of the surveyed year through the second half of the following year.
3 Prior 12 months. Approximately the second half of 2016 through the second half of 2017.
4 The index is the share reporting expected growth minus the share reporting a reduction.
5 In order to make time series comparisons, the survey data have been re-weighted to maintain consistency over time. Therefore, the values and observation counts
here may differ slightly from past reports and the appendix file for this report, which uses a different weighting scheme. Please see p. 31 for more detail.
6 Questions were asked separately, thus the number of observations may differ slightly between questions.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 2FINANCIAL CHALLENGES
64% of employer firms experienced financial challenges
in the prior 12 months.1,2
TYPES 2 OF FINANCIAL CHALLENGES, Prior 12 Months1 N=8,097
(% of employer firms)
Paying operating expenses 40%
Credit availability 30%
Debt payments 25%
Purchasing inventory
18%
to fulfill contracts
Other challenge 12%
Experienced no
36%
financial challenges
ACTIONS 2,3 TAKEN AS A RESULT OF FINANCIAL CHALLENGES, Prior 12 Months1 N=4,956
(% of employer firms reporting financial challenges)
Used personal funds 67%
Took out additional debt 39%
Cut staff, hours, and/or
33%
downsized operations
Made a late payment
28%
or did not pay
Other action 15%
1 Approximately the second half of 2016 through the second half of 2017.
2 Respondents could select multiple options.
3 Response option ‘unsure’ not shown in chart. See Appendix for more detail.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 3FUNDING BUSINESS OPERATIONS
In 2017, a larger share of employer firms funded their business through
retained business earnings than in 2016.
PRIMARY FUNDING SOURCE 1,2 (% of employer firms)
2015 Survey
N= 3,660
69% 19% 12%
2016 Survey 64% 21% 15%
N=10,151
2017 Survey 69% 19% 11%
N=8,485
Retained business earnings Personal funds External financing
68% of employer firms have outstanding debt. N=8,081
AMOUNT OF DEBT, 2 at Time of Survey (% of employer firms with debt) N=5,546
55% hold $100K or less,
unchanged from 2016
33%
22%
19% 18%
9%
≤$25K $25K–$100K $100K–$250K $250K–$1M >$1M
*Categories have been simplified for readability. Actual categories are: ≤$25K, $25,001K–$100K, $100,001K–$250K, $250,001K–$1M, >$1M.
1 In order to make time series comparisons, the survey data have been re-weighted to maintain consistency over time. Therefore, the values and observation counts
here may differ slightly from past reports and the appendix file for this report, which uses a different weighting scheme. Please see p. 31 for more detail.
2 Percentages may not sum to 100 due to rounding.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 4RELIANCE ON PERSONAL FINANCES
87% of employer firms rely on the owners’ personal credit scores
to obtain financing.
USE OF PERSONAL AND BUSINESS CREDIT SCORES (% of employer firms) N=5,941
13% 50% 37%
Business score only Owner's personal score only Both
COLLATERAL 1 USED TO SECURE OUTSTANDING DEBT (% of employer firms with debt) N=5,654
Personal guarantee 55%
Business assets 49%
Personal assets 33%
Portions of future sales 7%
None 15%
1 Respondents could select multiple options. Response options ‘unsure’ and ‘other’ not shown in chart. See Appendix for more detail.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 5DEMAND FOR FINANCING
The share of firms that applied for financing declined in the 2017 survey,
relative to prior surveys.
SHARE THAT APPLIED FOR FINANCING, 1 REASONS FOR APPLYING 3,4 N = 3,514
Prior 12 Months2 (% of employer firms) (% of applicants)
46% Expand business/
45% 59%
new opportunity5
40%
Operating expenses 43%
2015 2016 2017
Survey Survey Survey Refinance 26%
N=3,660 N=10,303 N=8,597
Other reason 9%
TOTAL AMOUNT OF FINANCING SOUGHT (% of applicants) N = 3,434
34%
20%
21%
17%
8%
≤$25K $25K–$100K $100K–$250K $250K–$1M >$1M
*Categories have been simplified for readability. Actual categories are: ≤$25K, $25,001K–$100K, $100,001K–$250K, $250,001K–$1M, >$1M.
1 In order to make time series comparisons, the survey data have been re-weighted to maintain consistency over time. Therefore, the values and observation counts
here may differ slightly from past reports and the appendix file for this report, which uses a different weighting scheme. Please see p. 31 for more detail.
2 Approximately the second half of the prior year through the second half of the surveyed year.
3 Respondents could select multiple options.
4 Respondents who selected ‘other’ were asked to explain their reason for applying. They often indicated that they were looking to start a business or to obtain a credit
line in case they needed it.
5 Full answer choice is: ‘Expand business, pursue new opportunity, or replace capital assets.’
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 6FINANCING RECEIVED
46% of employer firms that applied for credit received all the
financing they sought.
TOTAL FINANCING RECEIVED 1,2,3,4 (% of applicants)
2015 Survey
N= 1,645
48% 15% 17% 20%
2016 Survey 40% 15% 21% 24%
N=4,739
2017 Survey 46% 12% 20% 23%
N=3,628
All (100%) Most (51%–99%) Some (1%–50%) None (0%)
Low credit risk applicants were more likely to obtain all the financing
sought, compared to medium or high credit risk applicants.
FINANCING RECEIVED BY CREDIT RISK OF FIRM 1,3,5 (% of applicants)
10% All (100%)
29% Most (51%–99%)
13%
Some (1%–50%)
56% None (0%)
16% 27%
11% 28%
16% 50%
26%
16%
Low credit risk Medium credit risk High credit risk
N=1,556 N=777 N=191
1 Percentages may not sum to 100 due to rounding.
2 In order to make time series comparisons, the survey data have been re-weighted to maintain consistency over time. Therefore, the values and observation counts
here may differ slightly from past reports and the appendix file for this report, which uses a different weighting scheme. Please see p. 31 for more detail.
3 Share of financing received across all types of financing. Response option ‘unsure’ excluded from chart.
4 In the 2015 survey, the question was “How much of the TOTAL financing dollars your business applied for in the prior 12 months was approved?” In the 2016 and
2017 surveys, the question was “How much of the TOTAL financing dollars that your business sought in the prior 12 months did you obtain?”
5 Self-reported business credit score or personal credit score, depending on which is used to obtain financing for their business. If the firm uses both, the higher risk
rating is used. ‘Low credit risk’ is a 80-100 business credit score or 720+ personal credit score. ‘Medium credit risk’ is a 50–79 business credit score or a 620–719
personal credit score. ‘High credit risk’ is a 1–49 business credit score or aFINANCING SHORTFALLS
23% of applicants did not obtain any financing.
54% of applicants had a financing shortfall, meaning they obtained less
than the amount for which they applied.
REASONS FOR CREDIT DENIAL 1 (% of applicants with financing shortfall) N=832
Insufficient credit history 36%
Insufficient collateral 35%
Too much debt already 30%
Low credit score 27%
Weak business performance 22%
Other 7%
Funding gaps were most acute for firms seeking $25K-$250K.
FINANCING RECEIVED BY AMOUNT SOUGHT (% of applicants)
≤$25K
54% 9% 16% 21%
N=559
$25K–$100K
N=1,029
42% 13% 23% 22%
$100K–$250K 42% 14% 22% 22%
N=684
>$250K
53% 13% 17% 17%
N=1,099
All (100%) Most (51%–99%) Some (1%–50%) None (0%)
*Categories have been simplified for readability. Actual categories are: ≤$25K, $25,001K–$100K, $100,001K–$250K, >$250K.
1 Respondents could select multiple options.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 8APPLICATIONS Small employer firms most frequently applied for loans and lines of credit. FINANCING AND CREDIT PRODUCTS SOUGHT 1,2 (% of applicants) N=3,522 Loan or line of credit 87% Credit card 27% Leasing 10% Trade 9% Equity investment 8% Merchant cash advance 7% Factoring 4% APPLICATION RATE FOR LOANS/LINES OF CREDIT 1 (% of loan/line of credit applicants) N=2,875 Business loan 47% Line of credit 43% SBA loan or line of credit 26% Auto or equipment loan 16% Personal loan 12% Other 8% Mortgage 7% Home equity line of credit 4% 1 Respondents could select multiple options. 2 Response options 'other' and 'unsure' not shown. See Appendix for more detail. 2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 9
LOAN/LINE OF CREDIT SOURCES
Banks are the most common source that small firms apply to for credit.
CREDIT SOURCES APPLIED TO 1 (% of loan/line of credit and cash advance applicants) N=2,818
48% 47%
24%
18%
9%
5%
Large bank2 Small bank Online lender3 Credit union CDFI4 Other lender5
The share of applicants who seek loans, lines of credit, or cash advances
from online lenders has grown over time.
BORROWERS WHO APPLIED TO ONLINE LENDERS 3,6 (% of loan/line of credit and cash advance applicants)
24%
21%
20%
2015 Survey 2016 Survey 2017 Survey
N=1,541 N=3,868 N=2,920
1 Respondents could select multiple options.
2 Respondents were provided a list of large banks (those with at least $10B in total deposits) operating in their state.
3 ‘Online lenders’ are defined as nonbank alternative and marketplace lenders, including Lending Club, OnDeck, CAN Capital, and PayPal Working Capital.
4 Community development financial institutions (CDFIs) are financial institutions that provide credit and financial services to underserved markets and populations.
CDFIs are certified by the CDFI Fund at the U.S. Department of the Treasury.
5 Respondents who selected ‘other’ were asked to describe the source. They most frequently cited auto/equipment dealers, farm-lending institutions, friends/family/
owner, nonprofit organizations, private investors, and government entities.
6 In order to make time series comparisons, the survey data have been re-weighted to maintain consistency over time. Therefore, the values and observation counts
here may differ slightly from past reports and the appendix file for this report, which uses a different weighting scheme. Please see p. 31 for more detail.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 10LOAN/LINE OF CREDIT SOURCES (CONTINUED)
Applicants tended to choose a lender based on their perceived chance
of being funded, rather than on product cost.
FACTORS INFLUENCING WHERE FIRMS APPLY 1,2 (% of loan/line of credit and cash advance applicants)
70%
62%
47%
43% 46%
37% 34%
33% 31%
29% 27% 28% 26% 24%
20% 18%
15% 14%
Chance of being Cost or interest rate Recommendation Speed of decision Flexibility of product No collateral
funded or referral required
Large bank3 (N=1,144) Small bank (N=1,277) Online lender4 (N=428)
Medium/high credit risk applicants were more likely to apply to an online
lender than low credit risk applicants.
CREDIT SOURCES APPLIED TO BY CREDIT RISK OF FIRM 1,5,6 (% of loan/line of credit and cash advance applicants)
51% 49% 48% 47%
40%
8% 10% 8% 23%
16% 4% 14%
Large bank3 Small bank Online lender4 Credit union CDFI7 Other8
Low credit risk (N=1,345) Medium/high credit risk (N=856)
1 Respondents could select multiple options.
2 Response option ‘other' not shown. See Appendix for more detail.
3 Respondents were provided a list of large banks (those with at least $10B in total deposits) operating in their state.
4 ‘Online lenders’ are defined as nonbank alternative and marketplace lenders, including Lending Club, OnDeck, CAN Capital, and PayPal Working Capital.
5 Self-reported business credit score or personal credit score, depending on which is used to obtain financing for their business. If the firm uses both, the higher risk
rating is used. ‘Low credit risk’ is a 80-100 business credit score or 720+ personal credit score. ‘Medium credit risk’ is a 50–79 business credit score or a 620–719
personal credit score. ‘High credit risk’ is a 1–49 business credit score or aLOAN/LINE OF CREDIT APPROVAL
Loan/line of credit and cash advance applicants in the 2017 survey reported
greater success than applicants in previous surveys.
OUTCOME OF LOAN/LINE OF CREDIT AND CASH ADVANCE APPLICATIONS1 (% of loan/line of credit and cash advance applicants)
58% A
ll approved (100%)
53% 53% N
one approved (0%)
24%
22% 22%
2015 Survey 2016 Survey 2017 Survey
N=1,481 N=3,757 N=2,787
The share of applicants approved for at least some financing was highest
for auto and equipment loans and merchant cash advances.
APPROVAL RATE BY TYPE OF LOAN/LINE OF CREDIT OR CASH ADVANCE2,3 (% of loan/line of credit and cash advance applicants)
Auto or equipment loan (N=453) 82%
Merchant cash advance (N=195) 79%
Line of credit (N=1,217) 69%
Mortgage (N= 180) 66%
Business loan (N=1,243) 62%
SBA loan or line of credit (N=536) 54%
Personal loan (N=267) 50%
Home equity line of credit (N=79) 48%
1 In order to make time series comparisons, the survey data have been re-weighted to maintain consistency over time. Therefore, the values and observation counts
here may differ slightly from past reports and the appendix file for this report, which uses a different weighting scheme. Please see p. 31 for more detail.
2 Percent of loan/line of credit and cash advance applications for each product type that were approved for at least some credit.
3 Response option ‘other’ not shown in chart. See Appendix for more detail.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 12LOAN/LINE OF CREDIT APPROVAL (C0NTINUED)
Loan/line of credit and cash advance applicants had greatest success
obtaining financing at CDFIs, small banks, and online lenders.
APPROVAL RATE BY SOURCE OF LOAN/LINE OF CREDIT OR CASH ADVANCE 1,2
(% of loan/line of credit and cash advance applicants)
Large bank3 56%
N=1,225
Small bank 68%
N=1,346
Online lender4 75%
N=517
Credit union 53%
N=216
CDFI5
N=115
88%
Medium/high credit risk applicants had greatest success at online lenders.
APPROVAL RATE BY CREDIT RISK OF FIRM AND SOURCE OF LOAN/LINE OF CREDIT OR CASH ADVANCE1,2,6,7
(% of loan/line of credit and cash advance applicants)
77% 79% 76%
71%
67%
47%
35%
26%
Large bank3 Small bank Online lender4 Credit union
Low credit risk (N=85–673) Medium/high credit risk (N=87–390)
1 Percent of loan/line of credit and cash advance applications at each source that were approved for at least some credit.
2 Response option 'other' not shown. See Appendix for more detail.
3 Respondents were provided a list of large banks (those with at least $10B in total deposits) operating in their state.
4 ‘Online lenders’ are defined as nonbank alternative and marketplace lenders, including Lending Club, OnDeck, CAN Capital, and PayPal Working Capital.
5 Community development financial institutions (CDFIs) are financial institutions that provide credit and financial services to underserved markets and populations.
CDFIs are certified by the CDFI Fund at the U.S. Department of the Treasury.
6 Response option “CDFI” not shown due to insufficient sample size.
7 Self-reported business credit score or personal credit score, depending on which is used to obtain financing for their business. If the firm uses both, the higher risk
rating is used. ‘Low credit risk’ is a 80-100 business credit score or 720+ personal credit score. ‘Medium credit risk’ is a 50–79 business credit score or a 620–719
personal credit score. ‘High credit risk’ is a 1–49 business credit score or aLENDER SATISFACTION
Bank applicants were most dissatisfied with wait times for credit decisions.
Online lender applicants were most dissatisfied with high interest rates.
CHALLENGES WITH LENDERS, 1 Select Lenders
(% of loan/line of credit and cash advance applicants)
52% 55%
41%
37%
33% 33%
25% 10% 28% 12% 10% 9%
24% 10% 9%
20%
14% 15%
Long wait for credit Difficult application High interest rate Lack of transparency Unfavorable No challenges
decision or funding process repayment terms
Large bank2 (N=1,130) Small bank (N=1,237) Online lender3 (N=423)
Borrower satisfaction is consistently highest with CDFIs, credit unions, and
small banks, but satisfaction with online lenders has increased.
NET LENDER SATISFACTION OVER TIME5
(% satisfied minus % dissatisfied, among loan/line of credit and cash advance applicants approved for at least some financing)
77% 76% Large
bank2 (N=443–1,118)
75%
S
mall bank (N=640–1,268)
75% 74% O
nline lender3 (N=144–340)
75% 73% C
redit union (N=48–113)
66%
C
DFI4 (N=84–90)
47% 47% 49%
35%
26%
19%
2015 Survey 2016 Survey 2017 Survey
1 Respondents could select multiple options. Response option ‘other’ not shown in chart. See Appendix for more detail.
2 Respondents were provided a list of large banks (those with at least $10B in total deposits) operating in their state.
3 ‘Online lenders’ are defined as nonbank alternative and marketplace lenders, including Lending Club, OnDeck, CAN Capital, and PayPal Working Capital.
4 Community development financial institutions (CDFIs) are financial institutions that provide credit and financial services to underserved markets and populations.
CDFIs are certified by the CDFI Fund at the U.S. Department of the Treasury.
5 In order to make time series comparisons, the survey data have been re-weighted to maintain consistency over time. Therefore, the values and observation counts
here may differ slightly from past reports and the appendix file for this report, which uses a different weighting scheme. Please see p. 31 for more detail.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 14NONAPPLICANTS AND CREDIT USE
DEMAND FOR FINANCING N = 8,169 TOP REASON FOR NOT APPLYING N = 4,495
(% of employer firms) (% of nonapplicants)
50% Sufficient financing
40% Prior 60%
12 Months1 Did not
Applied 26% Debt averse
apply
13% Discouraged2
11% Other3
PERFORMANCE OF APPLICANTS AND NONAPPLICANTS (% of employer firms)
76%
61% 60%
52%
46%
35%
25% 22%
Operated at a profit4 Growing5 Low credit risk6 No financial challenges
Applicants (N7=2,575–3,526) Nonapplicants (N7=2,774–4,571)
1 Approximately the second half of 2016 through the second half of 2017.
2 Discouraged firms are those that did not apply for financing because they believed they would be turned down.
3 Response option ‘other’ includes ‘credit cost was too high,’ ‘application process was too difficult or confusing,’ and ‘other.’ See Appendix for more detail.
4 At the end of 2016.
5 Firms that increased revenues and employees in the prior 12 months and that plan to increase or maintain their number of employees.
6 Self-reported business credit score or personal credit score, depending on which is used to obtain financing for their business. If the firm uses both, the higher risk
rating is used. ‘Low credit risk’ is a 80-100 business credit score or 720+ personal credit score. ‘Medium credit risk’ is a 50–79 business credit score or a 620–719
personal credit score. ‘High credit risk’ is a 1–49 business credit score or aFINANCIAL CHALLENGES:
NONAPPLICANTS AND APPLICANTS
54% of nonapplicants experienced financial challenges in the
prior 12 months, compared to 78% of applicants.
TYPES OF FINANCIAL CHALLENGES, 1 Prior 12 Months2
(% of employer firms)
47% 47% 46%
35% 36%
26%
22%
18% 18%
13% 14%
10%
Paying operating Credit availability Debt payments Purchasing Other challenge No financial
expenses inventory to fulfill challenges
contracts
Applicants (N=3,526) Nonapplicants (N=4,571)
ACTIONS TAKEN AS A RESULT OF FINANCIAL CHALLENGES,1,3 Prior 12 Months2
(% of employer firms with financial challenges)
69%
Used personal funds
65%
Cut staff, hours, and/or 33%
downsized operations 34%
Made a late payment 34%
or did not pay 23%
55%
Took out additional debt
23%
13%
Other action
17%
Applicants (N=2,616) Nonapplicants (N=2,340)
1 Respondents could select multiple options.
2 Approximately the second half of 2016 through the second half of 2017.
3 Response option ‘unsure’ not shown in chart. See Appendix for more detail.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 16NONAPPLICANT DEBT HOLDINGS
Nonapplicants commonly use credit cards or loans/lines of credit—but at
lower rates than applicants.
USE OF FINANCING AND CREDIT, 1 Products used on a “regular basis”
(% of employer firms)
60%
Credit card
44%
74%
Loan or line of credit
38%
17%
Trade credit
10%
16%
Leasing
7%
13%
Equity investment
6%
6%
Factoring
2%
7%
Merchant cash advance
2%
Business does not use 6%
external financing 31%
Applicants (N=3,541) Nonapplicants (N=4,574)
LOAN/LINE OF CREDIT PRODUCTS HELD BY NONAPPLICANTS1,2 N=1,544
(% of nonapplicants with loan/line of credit)
Line of credit 41%
Business loan 29%
SBA loan or line of credit 17%
Personal loan 14%
Auto or equipment loan 10%
Mortgage 8%
Home equity line of credit 8%
1 Respondents could select multiple options.
2 Response options ‘other’ and ‘unsure’ not shown in chart. See Appendix for more detail.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 17NONAPPLICANT LOAN/LINE OF CREDIT SOURCES
Like recent applicants, nonapplicants with debt are most likely to hold
products that were originated at banks.
SOURCES OF LOANS, LINES OF CREDIT, AND CASH ADVANCES 1 N=1,557
(% of nonapplicants with loan/line of credit or cash advance)
42% 40%
19%
6% 8%
4%
Large bank2 Small bank Online lender3 Credit union CDFI4 Other lender5
Similar to recent applicants, nonapplicants with debt were most often
satisfied with their experiences at credit unions, small banks, and CDFIs.
NET LENDER SATISFACTION 6
(% satisfied minus % dissatisfied, among nonapplicants with loan/line of credit or cash advance)
81%
75%
67%
52%
43%
Large bank2 Small bank Online lender3 Credit union CDFI4
N=653 N=657 N=73 N=73 N=50
1 Respondents could select multiple options.
2 Respondents were provided a list of large banks (those with at least $10B in total deposits) operating in their state.
3 ‘Online lenders’ are defined as nonbank alternative and marketplace lenders, including Lending Club, OnDeck, CAN Capital, and PayPal Working Capital.
4 Community development financial institutions (CDFIs) are financial institutions that provide credit and financial services to underserved markets and populations.
CDFIs are certified by the CDFI Fund at the U.S. Department of the Treasury.
5 Respondents who selected ‘other’ were asked to describe the source. They most frequently cited auto/equipment dealers, farm-lending institutions, friends/family/
owner, nonprofit organizations, and private investors.
6 Response option ‘other’ not shown in chart. See Appendix for more detail.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 18FIRM SIZE: PERFORMANCE AND CHALLENGES
REVENUE SIZE OF FIRM N=7,763 PERFORMANCE INDEX BY REVENUE SIZE
(% of employer firms) OF FIRM, 1 Prior 12 Months2 (% of employer firms)
4%
≤$100K
55
$100K–$1M
18%
$1M–$10M
27% 29
>$10M 23 22 19 17
51% Profitability Revenue growth Employment growth
≤$1M (N=4,070–4,239) >$1M (N=3,301–3,453)
*Categories have been simplified for readability. Actual categories are:
≤$100K, $100,001K–$1M, $1,000,001M–$10M, >$10M.
SHARE OF FIRMS WITH FINANCIAL CHALLENGES BY REVENUE SIZE OF FIRM, Prior 12 Months2
(% of employer firms)
≤$100K (N=1,129)
$100K–$1M (N=3,184)
$1M–$10M (N=2,778)
74% 67% 54% 42%
>$10M (N=672)
Smaller firms reported experiencing all types of financial challenges at
higher rates than larger firms.
TYPES OF FINANCIAL CHALLENGES BY REVENUE SIZE OF FIRM, 3 Prior 12 Months2
(% of employer firms)
52%
42%
32% 36% 32% 13% 11%
25% 30% 29% 8%
19% 24% 20%
18% 18%
Paying operating Credit availability Making payments Purchasing inventory or
expenses on debt supplies to fulfill contracts
≤$100K (N=1,129) $100K–$1M (N=3,184) $1M–$10M (N=2,778) >$10M (N=672)
1 For revenue and employment growth, the index is the share reporting growth minus the share reporting a reduction. For profitability, it is the share
profitable minus the share not profitable.
2 Approximately the second half of 2016 through the second half of 2017.
3 Respondents could select multiple options. Response option ‘other’ not shown in chart. See Appendix for more detail.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 19FIRM SIZE: DEMAND FOR FINANCING
Smaller-revenue firms applied for financing less frequently than larger-
revenue firms.
SHARE THAT APPLIED FOR FINANCING BY REVENUE SIZE OF FIRM, Prior 12 Months1
(% of employer firms)
≤$100K (N=1,134)
$100K–$1M (N=3,207)
34% 39% 44% 49% $1M–$10M (N=2,800)
>$10M (N=682)
REASONS FOR APPLYING BY REVENUE SIZE OF FIRM 2 (% of applicants)
66%
57% 59% 60%
54%
42% 41% 17%
30% 29% 26%
24%
Expand business/new opportunity Operating expenses Refinance
≤$100K (N=406) $100K–$1M (N=1,350) $1M–$10M (N=1,282) >$10M (N=337)
TOP REASON FOR NOT APPLYING BY REVENUE SIZE OF FIRM (% of nonapplicants)
31%
48%
63%
75%
34%
29%
21% 19%
13% 5% 12%
14% 10% 13% 7%
6%
≤$100K $100K–$1M $1M–$10M >$10M
N=706 N=1,821 N=1,460 N=327
Sufficient financing Debt averse Discouraged3 Other4
1 Approximately the second half of 2016 through the second half of 2017.
2 Respondents could select multiple options. Response option ‘other’ not shown in chart. See Appendix for more detail.
3 Discouraged firms are those that did not apply for financing because they believed they would be turned down.
4 Response option ‘other’ includes ‘credit cost was too high,’ ‘application process was too difficult or confusing,’ and ‘other.’ See Appendix for more detail.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 20FIRM SIZE: CREDIT OUTCOMES
Smaller revenue firms reported financing gaps more often than larger firms.
FINANCING SHORTFALLS BY REVENUE SIZE OF FIRM, Share receiving less than the amount sought
(% of applicants)
≤$100K (N=397)
$100K–$1M (N=1,325)
70% 57% 44% 26% $1M–$10M (N=1,262)
>$10M (N=328)
LOAN/LINE OF CREDIT AND CASH LOAN/LINE OF CREDIT AND CASH
ADVANCE SOURCES APPLIED TO ADVANCE APPROVALS BY SOURCE
BY REVENUE SIZE OF FIRM 1,2 AND REVENUE SIZE OF FIRM
(% of loan/line of credit and cash advance applicants) (% of loan/line of credit and cash advance applicants)
54% 32%
Large bank3 44% Large bank3 45%
50% 76%
52% 93%
45% 39%
Small bank 45% Small bank 66%
52% 78%
50% 87%
32% 60%
Online lender 4 27% Online lender 4,6 76%
19% 88%
7%
17% ≤$100K (N=93–138) $1M–$10M (N=147–565)
Credit union 10% $100K–$1M (N=255–481) >$10M (N=128–136)
4%
4%
*Other sources not shown due to insufficient sample size.
5%
CDFI5 6%
3%
1%
≤$100K (N=309) $1M–$10M (N=1,040)
$100K–$1M (N=1,094) >$10M (N=265)
1 Respondents could select multiple options.
2 Response option ‘other’ not shown in chart. See Appendix for more detail.
3 Respondents were provided a list of large banks (those with at least $10B in total deposits) operating in their state.
4 ‘Online lenders’ are defined as nonbank alternative and marketplace lenders, including Lending Club, OnDeck, CAN Capital, and PayPal Working Capital.
5 Community development financial institutions (CDFIs) are financial institutions that provide credit and financial services to underserved markets and populations.
CDFIs are certified by the CDFI Fund at the U.S. Department of the Treasury.
6 Firms with >$10M in annual revenue not shown due to insufficient sample size.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 21FIRM AGE: PERFORMANCE AND CHALLENGES
AGE OF FIRM N=8,169 PERFORMANCE INDEX BY AGE OF FIRM, 1
(% of employer firms) Prior 12 Months2 (% of employer firms)
0–2 years
51 54
3–5 years
23% 20% 41
6–10 years 36
11–15 years 12 8
3 17 14
13% 16–20 years
9%
21+ years Profitability Revenue Employment
14% growth growth
20%
0
–5 years 6
–15 years 1
6+ years
(N=1,907–2,101) (N=2,157–2,264) (N=3,486–3,659)
SHARE OF FIRMS WITH FINANCIAL CHALLENGES BY AGE OF FIRM, Prior 12 Months2
(% of employer firms)
0–5 years (N=2,131)
6–15 years (N=2,291)
71% 66% 53% 16+ years (N=3,675)
Financial challenges, especially paying operating expenses, were
common across all age segments but more pronounced among startups
(0-5 year-old firms).
TYPES OF FINANCIAL CHALLENGES BY AGE OF FIRM, 3 Prior 12 Months2
(% of employer firms)
46%
42% 39%
32% 31% 29% 28%
20% 23%
19% 19%
12%
Paying operating Credit availability Making payments Purchasing inventory or
expenses on debt supplies to fulfill contracts
0
–5 years (N=2,131) 6
–15 years (N=2,291) 1
6+ years (N=3,675)
1 For revenue and employment growth, the index is the share reporting growth minus the share reporting a reduction. For profitability, it is the share profitable
minus the share not profitable.
2 Approximately the second half of 2016 through the second half of 2017.
3 Respondents could select multiple options. Response option ‘other’ not shown in chart. See Appendix for more detail.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 22FIRM AGE: DEMAND FOR FINANCING
SHARE THAT APPLIED FOR FINANCING BY AGE OF FIRM, Prior 12 Months1
(% of employer firms)
0
–5 years (N=2,149)
6
–15 years (N=2,302)
45% 41% 34% 1
6+ years (N=3,718)
REASONS FOR APPLYING BY AGE OF FIRM 2 (% of applicants)
60% 61%
55%
47% 44%
37%
25% 27% 25%
Expand business/new opportunity Operating expenses Refinance
0
–5 years (N=1,044) 6
–15 years (N=1,060) 1
6+ years (N=1,410)
Among nonapplicants, younger firms were less likely to report having
sufficient financing and more likely to be discouraged.
TOP REASON FOR NOT APPLYING BY AGE OF FIRM (% of nonapplicants)
41% 44%
62%
28% 28%
24%
19% 14%
14% 6%
12% 8%
0–5 years 6–15 years 16+ years
N=1,063 N=1,202 N=2,230
Sufficient financing Debt averse Discouraged3 Other4
1 Approximately the second half of 2016 through the second half of 2017.
2 Respondents could select multiple options. Response option ‘other’ not shown in chart. See Appendix for more detail.
3 Discouraged firms are those that did not apply for financing because they believed they would be turned down.
4 Response option ‘other’ includes ‘credit cost was too high,’ ‘application process was too difficult or confusing,’ and ‘other.’ See Appendix for more detail.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 23FIRM AGE: CREDIT OUTCOMES
Younger firms were more likely to report financing gaps than
more mature firms.
FINANCING SHORTFALLS BY AGE OF FIRM, Share receiving less than the amount sought
(% of applicants)
0
–5 years (N=1,049)
6
–15 years (N=1,038)
61% 55% 40% 1
6+ years (N=1,385)
LOAN/LINE OF CREDIT AND CASH ADVANCE LOAN/LINE OF CREDIT AND CASH ADVANCE
SOURCES APPLIED TO BY AGE OF FIRM 1,2 APPROVALS BY SOURCE AND AGE OF FIRM
(% of loan/line of credit and cash advance applicants) (% of loan/line of credit and cash advance applicants)
51% 45%
Large bank3 49% Large bank3 55%
44% 73%
46% 57%
Small bank 47% Small bank 67%
48% 85%
27% 70%
Online lender4
Online lender4 27% 78%
16% 82%
13%
Credit union 8% 0
–5 years (N=220–386)
7% 6
–15 years (N=156–386)
8% 1
6+ years (N=141–568)
CDFI5 3%
3% *Other sources not shown due to insufficient sample size.
0
–5 years (N=859)
6
–15 years (N=845)
1
6+ years (N=1,114)
1 Respondents could select multiple options.
2 Response option ‘other’ not shown in chart. See Appendix for more detail.
3 Respondents were provided a list of large banks (those with at least $10B in total deposits) operating in their state.
4 ‘Online lenders’ are defined as nonbank alternative and marketplace lenders, including Lending Club, OnDeck, CAN Capital, and PayPal Working Capital.
5 Community development financial institutions (CDFIs) are financial institutions that provide credit and financial services to underserved markets and populations.
CDFIs are certified by the CDFI Fund at the U.S. Department of the Treasury.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 24INDUSTRY: PERFORMANCE
INDUSTRY (% of employer firms) N=8,169
P
rofessional services
and real estate
10% N
on-manufacturing
19% goods production and
11% associated services
B
usiness support and
consumer services
R
etail
13% 18% H
ealthcare and
education
L eisure and hospitality
14% O
ther
15%
PERFORMANCE INDEX BY INDUSTRY, 1 Prior 12 Months2 (% of employer firms)
41% 40%
38%
33% 32%
29%
26% 26% 27%
24%
21% 22%
18% 19% 19%
16%
11%
5%
Profitability Revenue growth Employment growth
N
on-manufacturing goods production H
ealthcare and education (N=638–665) R
etail (N=706–729)
and associated services (N=1,500–1,581)
B
usiness support and consumer L eisure and hospitality
P
rofessional services and real estate (N=1,794–1,859) services (N=947–996) (N=502–543)
1 For revenue and employment growth, the index is the share reporting growth minus the share reporting a reduction. For profitability, it is the share
profitable minus the share not profitable.
2 Approximately the second half of 2016 through the second half of 2017.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 25INDUSTRY: FINANCIAL CHALLENGES
SHARE OF FIRMS WITH FINANCIAL CHALLENGES BY INDUSTRY, Prior 12 Months1 (% of employer firms)
73% 67% 67% 64% 63% 61%
Leisure and Business support and Retail Healthcare Non-manufacturing Professional
hospitality consumer services N=743 and education goods production and services and
N=549 N=1,009 N=678 associated services real estate
N=1,606 N=1,884
Financial challenges, especially paying operating expenses, were common
across all industries, but most prevalent for leisure and hospitality firms.
TYPES OF FINANCIAL CHALLENGES BY INDUSTRY, 1 Prior 12 Months2 (% of employer firms)
48%
45%
43%
41%
38% 38%
35% 34%
33% 32%
30% 29% 29%
28% 27%
26% 26%
24%
22% 21%
19% 20%
15%
11%
Paying operating Credit availability Making payments on debt Purchasing inventory or
expenses supplies to fulfill contracts
L eisure and hospitality (N=549) H
ealthcare and education P
rofessional services and real estate (N=1,884)
(N=678)
B
usiness support and consumer N
on-manufacturing goods production and
services (N=1,009) R
etail (N=743) associated services (N=1,606)
1 Respondents could select multiple options. Response option ‘other’ not shown in chart. See Appendix for more detail.
2 Approximately the second half of 2016 through the second half of 2017.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 26INDUSTRY: DEMAND FOR FINANCING
SHARE THAT APPLIED FOR FINANCING BY INDUSTRY, Prior 12 Months1 (% of employer firms)
50% 41% 41% 41% 40% 34%
Non-manufacturing Business support Retail Leisure and Healthcare and Professional
goods production and and consumer N=747 hospitality education services and
associated services services N=556 N=683 real estate
N=1,619 N=1,014 N=1,904
REASONS FOR APPLYING BY INDUSTRY 2 (% of applicants)
65%
63%
61%
57% 56%
49%
46% 45% 45%
42% 41% 41%
32%
30%
28%
24% 25%
20%
Expand business/new opportunity Operating expenses Refinance
N
on-manufacturing goods production and B
usiness support and consumer H
ealthcare and education (N=294)
associated services (N=837) services (N=434)
R
etail (N=309)
P
rofessional services and real estate (N=711) L eisure and hospitality
(N=250)
1 Approximately the second half of 2016 through the second half of 2017.
2 Respondents could select multiple options. Response option ‘other’ not shown in chart. See Appendix for more detail.
2017 SMALL BUSINESS CREDIT SURVEY | REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 27You can also read
