NEW YORK – Today, the Federal Reserve Bank of New York released findings from its Puerto Rico Small Business Survey (Survey), which focuses on the business performance, financing needs and borrowing experiences of firms across the Island. This inaugural survey was designed by the New York Fed with input from partners in Puerto Rico, and is modeled after the U.S. mainland Small Business Credit Survey.
This initiative is another step in the New York Fed's efforts to understand and inform policymakers and service providers about U.S. small business credit. The Survey is designed to fill important knowledge gaps about the Island's small business financing conditions and flag potential economic growth opportunities for the Commonwealth.
"Small businesses are the backbone of our local and national economies and the New York Fed has long worked to provide more in-depth information on financing conditions for small firms on the mainland," Kausar Hamdani, senior advisor and senior vice president in the Communications and Outreach Group at the New York Fed. "By extending our small business coverage to include Puerto Rico, we are now broadening our understanding of the credit environment for all U.S. small firms. We also hope that the survey results will help advance the dialogue now underway on solutions to revitalize Puerto Rico."
Key findings from the Survey can be found in the "Survey Highlights" section of the report. Of note, these findings include:
- Firms are persevering through Puerto Rico's economic crisis, though a majority reported declining revenues. Managing cash flow is a top concern, ranked above concerns about rising business costs.
- There is significant demand for credit with the most common reason being the need to meet operating expenses.
- For about half of all small firms, credit needs were under $25,000.
- Although a considerable portion of firms received all of the credit they applied for, one-third of applicants did not receive any of the credit that they applied for.
- Among non-applicant firms, debt aversion was the most common reason for not applying. This marked a notable difference from the mainland where nearly half of non-applicants chose not to apply because they had sufficient financing.
- About 80% of firms do not sell online or export their wares or services. Firms see this as a growth opportunity, ranking programs in support of growing sales—to the federal government, via online commerce and through exports—as their top training need.
In addition, later this month, New York Fed President William C. Dudley will travel to Puerto Rico to meet with leaders in the local community, government, business and education sectors.
About the Puerto Rico Small Business Survey
Issued as a pilot this year, the Puerto Rico Small Business Survey collects information about business performance, financing needs and choices, and borrowing experiences of small businesses—defined as firms with fewer than 500 employees. Small businesses employ more than 80% of all private sector workers in Puerto Rico.
The results released today come from a survey conducted throughout the spring of 2016 that analyzed responses from over 750 small businesses in Puerto Rico. The results address three major topic areas: firm demographics and performance; demand for credit and outcomes; and top ranked training and business growth needs.
A broad network of Puerto Rico business and community organizations partnered with the New York Fed to design and implement the survey. They include (in alphabetical order): Banco de Desarollo Económico para Puerto Rico; Camara de Mercadeo, Industria y Distribución de Alimentos; Centro Unido de Detallistas; Colegio de Contadores Públicos Autorizados de Puerto Rico; Compañía de Comercio y Exportación; Corporación para el Financiamiento Empresarial del Comercio a las Comunidades; Estudios Tecnicos, Inc.; Grupo Guayacan,Inc.; Hecho en Puerto Rico; Instituto de Estadísticas de Puerto Rico; Microfinanzas Puerto Rico; Minority Business Development Center; Pathstone; Puerto Rico Small Business & Technology Development Centers; Sociedad para la Gerencia de los Recursos Humanos Capítulo de Puerto Rico; U.S. Small Business Administration, PR and USVI District Office.