The Federal Reserve Banks of Atlanta, Cleveland, New York, and Philadelphia released findings from their Small Business Credit Survey that questioned firms about business and financing conditions. A macroblog post also summarizes those results. Respondents from the 10 states covered—Alabama, Connecticut, Florida, Georgia, Louisiana, New Jersey, New York, Ohio, Pennsylvania, and Tennessee—shed light on the difficulty many small businesses have accessing credit.
Demand for financing varied across firm sizes. While 22 percent of firms overall reported applying for credit in the first half of 2014, there was considerably weaker demand among firms with less than $1 million in annual revenues. Only 18 percent of microbusinesses, categorized as firms under $250,000 in revenue, applied for credit. In contrast, over 30 percent of small ($250,000 to $1 million) and midsized firms ($1 million to $10 million) and 58 percent of commercial firms (greater than $10 million) sought financing. Microbusinesses were also more likely than larger firms to be discouraged from applying and least likely to receive financing.
Respondents indicated a strong demand for small-dollar loans; over half of the applicants sought $100,000 or less in financing. Almost 40 percent of those seeking credit said the primary purpose was for business expansion. When seeking loans or lines of credit, banks were the most common place to apply, but 18 percent sought credit online and 18 percent submitted applications to other sources such as community development financial institutions and credit unions. Approval rates were highest for small regional and community banks, especially among microbusinesses. While less than half of financing-seeking microbusinesses were at all successful, 59 percent of those applying at small banks were approved for at least some of the amount requested.
The full report includes data tables by state, size of firm, industry, and development stage of business. Results are weighted to reflect the population of small businesses in the surveyed states. Data breakouts are available where there are enough responses to glean meaningful answers.
For additional information, contact Atlanta Fed economic policy analysis specialist Ellyn Terry.