The New York Fed conducts an annual survey of Puerto Rico small businesses to provide stakeholders, including business leaders and policymakers, with timely information on the firms' performance and financing experiences. Details of two reports based on the 2018 survey, which was fielded from March through May 2018 and asked firms to report on their business experiences in 2017, including the impacts of hurricanes Irma and Maria, are below.
This report focuses on understanding the challenges faced by the 77% of Puerto Rico small businesses that self-identified as having incurred a loss directly from hurricanes Irma and Maria. It also examines how they responded.
- The financial impact of the hurricanes took various forms, including decreased revenues (71% of firms), increased expenses (66%), asset and property damage (53%), and increased indebtedness (48%).
- A majority of affected firms held some type of insurance, but few were fully covered—4% had losses that were full covered, while 37% held no insurance.
- Of affected firms, 22% applied for financing to address hurricane losses, with most turning to government entities.
- Firms used a combination of insurance and financing to cover hurricane losses with varying degrees of success. Most had funding shortfalls.
- Demand for financing, especially for micro-loans of $50,000 or less, continues.
- Business confidence is high for 2018, with most surviving firms confident they will be open for business.
- Entrepreneurial energy for 2018 is high among surviving firms. A majority plan to update their offerings, with new or different goods or services.
Puerto Rico Small Business Sector Trends: Evidence from the 2018 New York Fed Survey
Small businesses make up 99.7% of all business establishments in Puerto Rico. This report describes the 2017 experiences of those currently operating on the Island.
- The share of micro-revenue firms, with most having annual revenues of $50,000 or less, increased.
- Annual revenues decreased for a majority of firms—54% reported a decrease in 2017 relative to 2016.
- Operating expenses increased for a majority of firms.
- Profitability remained under pressure for firms. On net, more firms reported losses than profits in 2016 and 2017.
- Demand for credit remained low at around 30% of all firms. An increase in the share of debt averse firms contributed to the weak credit demand in 2017.
- Credit demand is primarily for small-dollar loans, with 81% of applicant firms applying for loans of $100,000 or less.
- Credit approvals increased significantly. The share of firms that received funding, full or partial, was the highest in the past three years.
The Puerto Rico Small Business Survey is a joint effort by the New York Fed and a network of local partners to gather information on business conditions in the Commonwealth, including firms' financing needs and ability to access credit.
For more information, contact Javier Silva at firstname.lastname@example.org