Access to credit and workforce issues are top of mind for small businesses.
The outlook for small businesses is improving, says a survey sponsored by the Cleveland Fed. The survey asked questions about business conditions, financing, and workforce needs of small businesses. Fifty-five percent of respondents reported sales growth in 2013, and 78 percent expect sales to increase this year. More than a third of respondents added employees and almost half spent more on equipment and facilities in 2013 than in the previous 12 months.
Distributed through more than 20 partner organizations, including chambers of commerce and industry associations, the survey received responses from 143 businesses in the Fourth Federal Reserve District (Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia). Because of the relatively small sample size, the responses do not allow us to draw broad inferences, but they do provide a useful perspective on business conditions in the region and the challenges they pose.
With the positive results also came a number of challenges that could limit small business growth, including access to credit and finding the right workers. While 46 percent of respondents applied for credit in the past year, 14 percent reported that they did not apply for credit because they did not think their applications would be approved. For all credit products, 57 percent were approved for the full amount sought and 22 percent for part of it. Credit approval rates were highest for new credit cards issued to businesses, though almost a third of applicants were approved for less than the full amount requested. The lowest approval rates were for applications to extend existing lines of credit. In 2014, a quarter of respondents plan to apply for credit; of those, 60 percent expect to secure it.
Workforce issues are also much on the minds of respondents, especially firms that need highly skilled workers. People with some of the most urgently needed workforce skills, including advanced computer and technology skills, are among the most difficult to find. Respondents also reported difficulty in filling positions that require advanced math and foreign language skills.
Other challenges cited by respondents include weak sales and competition from larger businesses. For more details on the results of the 2013 small business survey, check out the full report.