2016 Small Business Report Covering All 50 States Reveals Significant Credit Challenges and the Critical Role of Personal Finances
ST. LOUIS - The 12 Federal Reserve Banks today issued the 2016 Small Business Credit Survey: Report on Employer Firms, which examines the results of an annual survey of business conditions and the credit environment faced by small business owners who have full- or part-time employees. This was the first time the survey was conducted on a national scale, roughly doubling the states represented and tripling the responses from the 2015 survey. The survey gathered experiences from firms across all 50 states and the District of Columbia through the joint efforts of the Federal Reserve Banks of New York, Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City, Minneapolis, Philadelphia, Richmond, San Francisco and St. Louis.
The Report on Employer Firms found that, although many employer small businesses were profitable and optimistic, a significant majority faced financial challenges, experienced funding gaps and relied on personal finances. These issues were even more pronounced for the smallest firms, which were less likely to receive necessary funding and more likely to rely on personal finances to operate. These findings highlight small businesses’ obstacles to growth and raise new questions about how to overcome them.
Key findings can be found in the Report on Employer Firms’ executive summary. These findings include:
“Smaller” employer small businesses (with $1 million or less in revenue) make up 70 percent of survey respondents, and their challenges and reliance on personal finances are far more pronounced than those of “larger” employer small businesses (with more than $1 million in revenue). These challenges are particularly salient for the U.S. macroeconomy, since new employer small businesses, which are typically “smaller” in their early stages, are the primary source of U.S. job growth.
Smaller firms were:
The survey collects information about business performance, financing needs and choices and borrowing experiences of firms with 500 or fewer employees. Responses to the survey 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. The survey is not a random sample; therefore, results should be analyzed with awareness of potential methodological biases.
The survey was launched in 2014 through an effort that merged the regional surveys conducted by several Federal Reserve Banks. The 2016 survey is the first iteration that was conducted on a national scale with involvement from all 12 Federal Reserve Banks and input collected across all 50 states. The 2016 survey collected 15,991 responses in total, 10,303 of which were from employer firms.