2015 Small Business Credit Survey: Report on Employer Firms

Despite the significance of small businesses to the U.S. economy and to local communities, information on small business financing conditions is limited, leaving important knowledge gaps for policymakers and service providers.

To fill those gaps, the Small Business Credit Survey, a collaboration among seven Federal Reserve Banks, including New York, Atlanta, Boston, Cleveland, Philadelphia, Richmond and St. Louis, offers insight about business owners’ financing decisions. The survey focuses particular attention on how credit demand, sources and outcomes vary within the small business sector.

This report focuses on the survey responses of 3,459 employer firms from 26 states. It sheds particular light on three sub-segments—startups, microbusinesses, and growing firms, or those with increasing revenues and employees and plans to increase or maintain their number of employees.

Here are key findings from the survey:

More small businesses reported stronger performance in the 2015 survey than in the 2014 survey.

Employer Firm Performance Index1

 2014 Survey2015 Survey
Profitability 15% 27%
Revenue growth 21% 26%
Employment growth 14% 15%
Table Notes
1 For revenue and employment growth, the index is the share reporting positive growth minus the share reporting negative growth. For profitability, it's the share profitable minus the share not-profitable.

Cash flow is a common challenge for small businesses. For growing firms, hiring and/or retaining qualified staff is the top challenge.

Top Business Challenge by Type of Firm

 All firmsGrowingStartup
Cash flow 22% 23% 25% 26%
Costs of running business 19% 16% 23% 22%
Credit availability 9% 12% 13% 13%
Government regulations 10% 9% 4% 4%
Hiring and/or retaining qualified staff 17% 24% 15% 9%
Revenues/sales 13% 6% 10% 16%
Taxes 9% 8% 9% 7%
Other 2% 3% 2% 3%

While financing success improved in the 2015 survey, half of applicant firms received less than the amount requested.

Application Outcomes by Size of Firm

 Fully fundedFinancing shortfall
All firms 50% 50%
>$10M 73% 27%
$1M-$10M 63% 37%
$100K-$1M 45% 55%
Micro (<$100K) 37% 63%

Traditional bank lending continues to be the primary source of financing for small businesses.

Credit Sources Applied to by Revenue Size of Firm

 All Firms>$10M$1M-$10M$100K-$1MMicro
Small bank 52% 53% 59% 52% 44%
Large bank 42% 58% 45% 39% 41%
Online lender 20% 6% 11% 22% 30%
Credit union 9% 1% 4% 9% 14%

Online lenders have the lowest borrower satisfaction levels because of concerns with high interest rates and unfavorable repayment terms.

Lender Satisfaction Score 1

LenderSatisfaction Score
Small bank 75%
Credit union 56%
Large bank 51%
Online lender 15%
Other 33%
Table Notes
1 Satisfaction score is the share satisfied with lender minus the share dissatisfied.

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Report on Employer Firms
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Survey Questionnaire

Press Release: Federal Reserve Banks Release Report on Credit Experiences of Small Businesses

About the Survey

Established in 2010 by the New York Fed, the Small Business Credit Survey (SBCS) is a survey of firms reporting information about business performance, financing needs and choices, and borrowing experiences. The SBCS captures the perspectives of businesses with fewer than 500 employees and results are weighted to reflect the full population of small businesses in the 26 states of coverage, along the dimensions of industry, age, employee size and geography.