Small Business Finances - Federal Reserve Bank of New York

INSIGHTS
1	Small businesses identified their top-three sources of financing. After business earnings, the highest ranked sources are credit cards, commercial bank loans, and loans from family and friends.
2	68 percent of all firms included some type of bank-related product among their top-three sources of funding in 2010.
3	Firms across the age and size spectrum rely on credit cards.
4	More than 40 percent of all firms more than 10 years old and those with 11+ employees rank business loans as a key funding source.
5	32 percent of polled firms do not rank a bank-related product among their top-three sources. Of these, nearly two-thirds rely solely on business earnings. These firms tend to be smaller or more recently established.
6	11.9 percent of firms moved a bank product to top-three ranking in 2010 relative to 2008. 7 percent dropped all bank products from their top-three ranking.
7	Among firms that elevated bank-related credit to top-three ranking, credit cards were the most frequently cited, followed by commercial business loans. Among firms that de-prioritized bank-related financing, business loans and credit cards were the most frequently mentioned products.
8	From 2008 to 2010, reliance on commercial bank loans contracted among all but the oldest (21+ years) firms, while credit card reliance increased by all groups except 0-5 year old firms.

Many small businesses continue to struggle even though the recession has officially ended. According to the 2010 FRBNY Small Business Finances Poll, conducted in August 2010, 75 percent of regional firms reported being unable to secure all the credit that they sought.

The most recent poll findings show how small businesses are financing their operations: 68 percent included bank credit as one of their top-three sources of financing. However, notable changes occurred between 2008 and 2010: reliance on bank credit increased, especially broader use of credit cards, while commercial bank loan use fell among all but the oldest firms.

The views expressed by the small business owners in the video [above] are their own and do not necessarily reflect the views of the Federal Reserve Bank of New York or the Federal Reserve System.

Charts
About the Data
About the Survey
Partners

In June-July 2010, the Federal Reserve Bank of New York’s Office of Community Affairs polled 426 small-business owners on their recent business performance, financing choices, and borrowing experiences. This website presents analysis of a subset of the 2010 poll results which were not highlighted in the Fact and Trends report published in October 2010.

In total, there were 426 poll respondents; however, it is important to note that the number of respondents to each individual question varied. The graphs featured on this page each identify the number of respondents (n=) for relevant questions. If the analysis required cross-tabulation of multiple questions, only firms which responded to all relevant questions were included. For example, in the graphs describing changes in behavior between 2008 and 2010, only firms which responded to questions on 2008 and 2010 were included in the analysis.

The Federal Reserve Bank of New York’s Office of Regional and Community Outreach polled small businesses about their business performance, financing choices, and borrowing experiences. The poll was conducted online and distributed through a network of local government and nonprofit partners.

	AccionUSA	New Jersey Economic Development Authority

	Ben Franklin Technology Partners of Pennsylvania	New York Business Development Corporation

	The Bronx Overall Economic Development Corporation	The New York City Council

	The Brooklyn Chamber of Commerce	The New York City Department of Consumer Affairs

	The Business Council of New York State	The New York State Small Business Development Centers

	Community Development Corporation of Long Island	Queens Economic Development Corporation

	Community First Fund	The Staten Island Economic Development Corporation

	Cooperative Business Assistance Corporation	Working Today–Freelancers Union

	The Entrepreneurs Forum of Greater Philadelphia

	The Manhattan Chamber of Commerce


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