2017 Small Business Credit Survey

Timely information on small business financing needs, decisions and outcomes is critical to understanding and fostering the sector's health and growth. To provide that information to policy makers, researchers and service providers, the Small Business Credit Survey (SBCS) asks small business owners to detail their current business climate, financial needs and recent credit experiences.

Report on Employer Firms

The findings of the Report on Employer Firms provide an in-depth look at small business performance, debt holdings, and credit experiences. Fielded in the third and fourth quarters of 2017, the survey yielded 8,169 responses from small employer firms, businesses that have 1-499 full- or part-time employees (hereafter “firms”), in the 50 states and the District of Columbia. New features of this year’s report include expanded time trend information and a detailed look at the credit experiences of firms by various segments, including revenue size, age, and industry. The survey findings complement other national data on aggregate lending volumes and lender perceptions.

Heading into 2018, small businesses reported stronger revenue growth and profitability but continued financial challenges for some segments of firms. Overall, the survey finds:

  • Improved performance in 2017 and heightened optimism for revenue and employment growth in 2018.
  • Comparatively weaker demand for new financing, with a smaller share of firms applying for new capital than in prior years and half of nonapplicants reporting that they had sufficient financing.
  • Improved financing success for applicants, with a larger share receiving the full amount of financing requested and higher success rates for loan and line of credit applicants compared to 2016.
  • A moderate increase in applications to online lenders2 overall in 2017, with notably higher application rates among self-reported medium and high credit risk firms.
  • Continued financial challenges—most commonly, paying operating expenses and wages, and credit availability—for some firm segments, particularly recent credit applicants, micro firms (≤$100K in annual revenues), startups (0-5 years), and firms in the leisure and hospitality industry.
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Report on Disaster-Affected Firms

In 2017, following widespread natural disasters, the SBCS included a special module of questions for firms located in FEMA-designated disaster zip codes.

The Report on Disaster-Affected Firms draws on Census data and the SBCS dataset to understand the unique attributes of FEMA-designated disaster areas in late 2016 and 2017, and the performance, experiences, and financing needs of firms with natural disaster-related losses. Our analysis compares firms that were located in natural disaster-affected areas but did not face damages (defined below as "unaffected firms") to those that did (defined below as "affected firms").

Note: This report does not include data for Puerto Rico or the U.S. Virgin Islands, areas that experienced extensive damage in 2017 from Hurricanes Irma and Maria. The business experiences and needs on these islands differ considerably from those on the mainland. With that in mind, we conduct a separate annual small business survey to gauge the needs of Puerto Rico specifically.

The following are key findings from our analysis:

  • Natural disaster-affected areas in 2016 and 2017 differed from the U.S. overall in notable ways.
  • In disaster-affected areas, losses were fairly common.
  • Disasters struck small firms across the age and income spectrum, but losses were concentrated among Hispanic-owned firms and firms in the retail and leisure & hospitality industries.
  • Foregone revenues, not assets, were the largest source of losses.
  • Affected firms reported sizable revenue and employment gaps and elevated incidence of financial challenges compared to unaffected firms.
  • Firms' insurance holdings appear to be mismatched to the sources of their damages, leaving uncovered losses.
  • More affected firms applied for credit financing, including SBA loans, than disaster relief. The hardest hit firms tended to hedge, applying for both disaster assistance and financing.
  • Affected firms sought credit at higher rates than unaffected firms.
  • Affected firms are higher risk and experience notable funding gaps.
  • High levels of optimism for 2018 among affected firms.
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