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Press Release

Small employer firms reveal more optimism and success, though financial challenges persist for some

Federal Reserve Banks' headline small business report finds more firms are profitable and confident; yet certain segments struggle acutely with credit access, expenses, and more

The 12 Federal Reserve Banks today issued the 2017 Small Business Credit Survey: Report on Employer Firms, which examines the results of an annual survey of small business owners nationwide. The Report focuses on small employer firms, businesses that have between 1-499 full- or part-time employees (hereafter “firms”). It builds on the Reserve Banks' new website, which serves as a hub for small business research and analysis.

The Report found that firms' profitability, revenue growth and employment growth improved, and optimism about future performance reached its highest level in several years. More firms received all of the financing requested, and a significant portion did not apply for credit because they already had sufficient financing. However, despite this success, smaller firms, startups and those in the leisure & hospitality industry continued to struggle acutely with financing challenges.

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

Performance and Expectations

  • The share of firms reporting profitability, revenue growth and employment growth all increased from the 2016 survey.
  • Optimism about the coming year reached its highest level since 2015, with a net 66% of firms anticipating revenue growth and a net 44% expecting to hire new employees.

Financing Demand, Approvals and Sources

  • Fewer firms applied for financing, and half of the nonapplicants did not apply because they already had sufficient financing.
  • A larger share of applicants received the full amount of financing requested (46% versus 40% in 2016).
  • Applicants sought financing most frequently at large banks (48%), small banks (47%) and online lenders (24%).
  • Applicants had the most success at community development financial institutions (88% approval rate) and online lenders (75% approval rate). Of note, applications to online lenders increased, but firms were the least satisfied with them.

Financial Challenges and Reliance on Personal Finances

  • Even with this stronger performance, greater optimism and reduced applications for financing, 64% of firms experienced financial challenges.
  • These challenges were particularly acute for startups, those with smaller annual revenues and those in the leisure & hospitality industry.
  • Firms most often addressed financial challenges by using personal funds (67%).

Cleveland Fed's Region (Fourth District – KY, OH, PA, WV)

  • Fourth District firms were more likely to rely on external financing as the primary funding source for their businesses than firms nationally (16% versus 11% nationally).
  • Fourth District firms were less likely to have sought financing to meet operating expenses (34% versus 43% nationally).
  • A similar share of Fourth District firms sought financing in the prior 12 months compared to firms nationally (43% compared to 40%), but were, on average, more likely to be approved.
  • Fourth District firms were more likely to have financial decision makers over the age of 55 (49% compared to 43% nationally).

Additional reports on the 2017 Small Business Credit Survey will be released throughout 2018 at These will take an in-depth look into specific types of small businesses, including nonemployer firms, start-ups and minority-owned firms.

About the Small Business Credit Survey (SBCS)

The SBCS collects information about business performance, financing needs and choices and borrowing experiences of firms with fewer than 500 employees. Responses to the SBCS 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 in the United States. The SBCS is not a random sample; therefore, results should be analyzed with awareness of potential methodological biases.

The SBCS includes experiences from firms across all 50 states and the District of Columbia through the joint efforts of the Federal Reserve Banks of Cleveland, Atlanta, Boston, Chicago, Dallas, Kansas City, Minneapolis, New York, Philadelphia, Richmond, San Francisco and St. Louis. The 2017 SBCS collected 14,465 responses in total, 8,169 of which were from employer firms.

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,, 513.455.4479