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Federal Reserve Banks’ Small Business Report Finds More Firms Are Profitable and Confident; Yet Certain Segments Struggle with Credit Access, Expenses, More


The 12 Federal Reserve Banks today issued the 2017 Small Business Credit Survey: Report on Employer Firms, which examines the results of an annual survey of small business owners nationwide. The Report focuses on small employer firms, businesses that have between 1-499 full- or part-time employees (hereafter “firms”). It builds on the Reserve Banks’ new website, which serves as a hub for small business research, analysis and thought leadership.

The Report found that firms’ profitability, revenue growth and employment growth improved, and optimism about future performance reached its highest level in several years. More firms received all of the financing they requested, and a significant portion did not apply for credit because they already had sufficient financing. Despite this success, smaller firms, startups, and those in the leisure and hospitality industry continued to struggle acutely with financing challenges.

Key findings can be found in the Report on Employer Firms’ executive summary. These findings include:

Performance and Expectations

  • The share of firms reporting profitability, revenue growth, and employment growth all increased from the 2016 survey.
  • Optimism about the coming year reached its highest level since 2015, with a net 66% of firms anticipating revenue growth and a net 44% expecting to hire new employees.

Financing Demand, Approvals and Sources

  • Fewer firms applied for financing, and half of the nonapplicants did not apply because they already had sufficient financing.
    • A larger share of applicants received the full amount of financing requested (46% versus 40% in 2016).
    • Applicants sought financing most frequently at large banks (48%), small banks (47%), and online lenders (24%).
    • Applicants had the most success at community development financial institutions (88% approval rate) and online lenders (75% approval rate). Of note, applications to online lenders increased, but firms were the least satisfied with them.

Financial Challenges and Reliance on Personal Finances

  • Even with this stronger performance, greater optimism, and reduced applications for financing, 64% of firms experienced financial challenges.
  • These challenges were particularly acute for startups, those with smaller annual revenues and those in the leisure and hospitality industry.
  • Firms most often addressed financial challenges by using personal funds (67%).

Additional reports on the 2017 Small Business Credit Survey will be released throughout 2018 at These will take an in-depth look into specific types of small businesses, including nonemployer firms, start-ups and minority firms.

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. 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 U.S. 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 the joint efforts of the Federal Reserve Banks of St. Louis, Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City, Minneapolis, New York, Philadelphia, Richmond and San Francisco. The 2017 SBCS collected 14,465 responses in total, 8,169 of which were from employer firms.