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Small Business Credit Survey 2020 Report on Employer Firms

The publication of this report comes at a particularly challenging time for our nation’s small business sector. Small businesses across the country are grappling with the profound impact of the COVID-19 pandemic on their operations and on their owners’ and employees’ livelihoods. As policymakers and service providers begin to enact programs to help firms weather the economic challenges, insights about the financial position of small businesses can provide a useful perspective on how best to target funds and services. The Federal Reserve Banks’ Small Business Credit Survey (SBCS), fielded in Q3 and Q4 of 2019, offers baseline data on the financing and credit positions of small firms before the onset of the crisis. The survey findings provide insights into firms’ preparedness to withstand the shock, their existing debt levels, and the actions they may take in response to an unexpected loss of revenues.

The results of the survey raise several important considerations in the current environment: most firms are ill prepared for a sustained period of revenue loss; firms’ reliance on personal funds could mean severe repercussions for those individuals and households in the event of failure; and many small businesses do not rely on traditional banks for credit, and, therefore, any program designed to support them should take that into consideration.

The importance of small businesses to our nation’s economy cannot be overstated. Small employer firms, those with 1–499 employees, are vital to the fabric of local communities. The SBCS delivers timely information on small business financing needs, decisions, and outcomes to policymakers, lenders, and service providers.

Overall, the survey finds

  • Firm performance was relatively strong prior to the pandemic.
  • Profit margins were tightening for many.
  • Firms have common cash flow challenges, and many rely on personal funds.
  • Debt holdings are common and typically small dollar, and nearly half of recent credit applicants have experienced funding gaps.
  • Though banks are the most broad-reaching lending channel, many small businesses do not use bank funding.


Check here for related Small Business content, including analyses, credit-survey results, commentary, and more.

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