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Press Release

Federal Reserve Banks release first-ever national findings from the Small Business Credit Survey

2016 small business report covering all 50 states reveals significant credit challenges and the critical role of personal finances

The 12 Federal Reserve Banks today issued the 2016 Small Business Credit Survey: Report on Employer Firms, which examines the results of an annual survey of business conditions and the credit environment faced by small business owners who have full- or part-time employees. This was the first time the survey was conducted on a national scale, roughly doubling the states represented and tripling the responses from the 2015 survey. The survey gathered experiences from firms across all 50 states and the District of Columbia through the joint efforts of the Federal Reserve Banks of New York, Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City, Minneapolis, Philadelphia, Richmond, San Francisco and St. Louis.

The Report on Employer Firms found that, although many employer small businesses were profitable and optimistic, a significant majority faced financial challenges, experienced funding gaps and relied on personal finances. These issues were even more pronounced for the smallest firms, which were less likely to receive necessary funding and more likely to rely on personal finances to operate. These findings highlight small businesses’ obstacles to growth and raise new questions about how to overcome them.

Key findings can be found in the Report on Employer Firms’ executive summary. These findings include:

Performance and Expectations

  • Similar to the 2015 survey, about half of the firms were profitable and had growing revenues. Most firms were also optimistic about the coming year, with a net 61% expecting revenues to grow and 39% anticipating job growth.
  • Changes in debt levels and expectations about future debt were modest. 34% saw their debt levels increase in 2016 and only 19% expect to increase their debt levels in 2017.

Financial Challenges and Reliance on Personal Finances

  • Despite their optimism, 61% of firms faced financial challenges in the last year. The top challenges were accessing necessary credit (44%) and meeting operating expenses (36%).
  • The vast majority of firms addressed financial challenges by using personal finances (76%) before taking on additional debt (44%). Most also relied on the owners’ personal credit scores to obtain financing (87%).

Financing Demand, Approvals and Sources

  • Similar to the results of the 2015 survey, 45% of firms applied for financing.
  • Most loan applications were very small, with 55% of firms applying for $100,000 or less in financing and 74% applying for $250,000 or less in financing.
  • Applicants were more likely than non-applicants to be growing (34% versus 25%) but were more likely to have experienced recent financial challenges (76% versus 48%).
  • Banks were the most common source of credit for firms, with 50% applying to large banks and 46% applying to small banks.
  • Loans or lines of credit were the most frequently sought lending products (86%). Loan applicants had greater success at community development financial institutions, small banks and online lenders than at large banks.

Smaller Firms

  • “Smaller” employer small businesses (with $1,000,000 or less in revenue) make up 70% of survey respondents, and their challenges and reliance on personal finances are far more pronounced than those of “larger” employer small businesses (with more than $1,000,000 in revenue). These challenges are particularly salient for the U.S. macroeconomy, since new employer small businesses, which are typically “smaller” in their early stages, are the primary source of U.S. job growth. [1] [2]
  • Smaller firms were:
    • More likely to face financial challenges (67%) than larger firms (47%).
    • More dependent on personal finances (25% relied on personal finances and 48% relied exclusively on a personal credit score) compared to larger firms (11% and 25%, respectively).
    • More likely to face financing shortfalls, with 67% of applicants reporting a gap compared to 45% of larger firms.
    • Notably less successful at obtaining financing at large banks (45% success) than larger firms were (72% success).

Additional reports on the 2016 Small Business Credit Survey will be released throughout 2017. These will take an in-depth look into specific types of small businesses, including start-ups, minority firms and microbusinesses.

About the Small Business Credit Survey (Survey)

The Survey collects information about business performance, financing needs and choices and borrowing experiences of firms with 500 or fewer employees. Responses to the Survey provide insight into the dynamics behind aggregate lending trends and about noteworthy segments of small businesses. The results are weighted to reflect the full population of small businesses. The Survey is not a random sample; therefore, results should be analyzed with awareness of potential methodological biases.

The Survey was launched in 2014 through an effort that merged the regional surveys conducted by several Federal Reserve Banks. The 2016 Survey is the first iteration that was conducted on a national scale with involvement from all 12 Federal Reserve Banks and input collected across all 50 states. The 2016 Survey collected 15,991 responses in total, 10,303 of which were from employer firms.

[1] Haltiwanger, John, Ron S. Jarmin, and Javier Miranda. (2013). Who Creates Jobs? Small Versus Large Versus Young. The Review of Economics and Statistics, 95 (2): 347-361.

[2] Robb, Alicia, E.J. Reedy, Janice Ballou, David DesRoches, Frank Potter, and Zhanyun Zhao. 2010. An Overview of the Kauffman Firm Survey. Ewing Marion Kauffman Foundation; U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Census Bureau, Business Dynamics Statistics.

Federal Reserve Bank of Cleveland

The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.

The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.

Media contact

Doug Campbell,, 513.218.1892