Fed Survey Finds Financial Challenges Increasing Among Smallest US Firms

September 29, 2022—The Small Business Credit Survey 2022 Report on Nonemployer Firms, part of a series of reports from a national survey of small businesses conducted by the 12 Federal Reserve Banks, found that most businesses with no employees other than the owner were earning lower revenues than before the pandemic.

Highlights:

• Thirty-one percent of nonemployers in the 2021 SBCS reported an increase in revenue, compared to just 14% in the 2020 SBCS. Despite the improvement in revenue performance from 2020, a majority of nonemployers reported that revenues remain lower than in 2019.
• The share of nonemployer firms reporting some type of financial challenge grew from 81% in 2020 to 88% in 2021.
• Sixty-two percent of nonemployers applied for pandemic-related financial assistance in the prior 12 months, 15 percentage points fewer than the share of employer firms that applied.
• Just 16% of smaller nonemployer firms (those $100,000 or less in annual revenues) reported receiving all of the financing for which they applied. In comparison, 29% of larger nonemployers (those with more than $100,000 in annual revenues) received all that they sought, nearly in line with the share of employer firms that were fully funded.

The report released today is based on the Federal Reserve Banks’ 2021 Small Business Credit Survey, an annual survey of small business owners that was fielded in September and October of 2021. It is a deeper look at the same dataset that served as the basis for the Small Business Credit Survey 2022 Report on Employer Firms released February 22, 2022, the Small Business Credit Survey 2022 Report on Firms Owned by People of Color released June 29, 2022, and the Small Business Credit Survey 2022 Report on Hiring and Worker Retention released July 12, 2022.

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. These small businesses include nonemployer firms, or businesses with no employees other than the owner(s). Nonemployer firms represent 81% of all US small businesses.

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 collaboration of all 12 Federal Reserve Banks. The 2021 survey yielded responses from a nationwide convenience sample of 6,834 firms with no employees other than the owner(s) and 10,914 firms with between 1 and 499 employees.

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