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Press Release

Fed Survey Finds Small Business Credit Conditions Returning to Prepandemic Norms Amid Some Persistence of Challenges

03.08.2023

For the first time since the 2020 survey, firms in the SBCS were more likely to report that revenues and employment levels increased.

The 2023 Report on Employer Firms: Findings from the 2022 Small Business Credit Survey, issued today by the 12 Federal Reserve Banks, found promising signs that some small business trends are returning to prepandemic norms. For the first time since the 2020 survey, firms in the SBCS were more likely to report that revenues and employment levels increased rather than decreased in the past 12 months, and the share of firms reporting that they were operating profitably rose substantially year-over-year.

The 2022 SBCS yielded 7,864 responses from a nationwide convenience sample of small employer firms with 1–499 full- or part-time employees across all 50 states and the District of Columbia.

Among the key findings:

  • Revenue, employment, and profitability each improved from 2021, but expectations worsened year-over-year. The share of firms operating at a profit rose from 35% in the 2021 survey to 45% in the 2022 survey.
  • Almost every firm in the survey experienced at least one operational or financial challenge. In response to hiring challenges, firms were more likely in 2022 than in 2021 to make changes to employee compensation (for example, raising wages or enhancing non-wage compensation) and less likely to reduce business operations or add to their employees’ workload.
  • Firms were more likely to use personal and government sources than funding from financial institutions. Two-thirds of firms (66%) used the owner’s personal savings or funding from friends or family in the past five years.
  • The application rate for traditional financing rebounded to prepandemic levels. The share of firms fully approved increased from 2021 but remains lower than in 2019. While applications for pandemic-related financial assistance declined, the share of firms that applied for a traditional loan, line of credit, or merchant cash advance increased to 40% in 2022, up from 25% in 2021.

Read the Report: https://www.fedsmallbusiness.org/survey/2023/report-on-employer-firms

Additional Information and Resources: Home - Fed Small Business

About the Small Business Credit Survey (SBCS)

The SBCS is an annual survey of firms with fewer than 500 employees. These types of firms represent 99.7% of all employer establishments in the United States. Respondents are asked to report information about their business performance, financing needs and choices, and borrowing experiences. Responses to the SBCS provide insights on the dynamics behind lending trends and shed light on various segments of the small business population. The results are weighted to reflect the full population of small businesses in the United States. The SBCS is not a random sample; results should be analyzed with awareness of potential biases that are associated with convenience samples.

Fielded September through November 2022, the most recent SBCS was the third conducted since the COVID-19 pandemic began in early 2020. The 2022 SBCS yielded nearly 14,000 responses from a nationwide convenience sample of small firms across all 50 states and the District of Columbia, including 7,864 responses from employer firms with 1–499 full- or part-time employees. The remaining responses represent nonemployer firms, or those with no employees other than the owner(s). A separate report on nonemployer firms is forthcoming.

For more information on the Small Business Credit Survey, please visit fedsmallbusiness.org.

Media contact

Doug Campbell, doug.campbell@clev.frb.org, 513.455.4479