More than 60 percent of small businesses faced financial challenges in the past year, according to the 2016 Small Business Credit Survey.
The survey, which was a collaboration of all 12 Federal Reserve banks, provides an in-depth look at small business performance and debt. This report focuses on employer firms, or those with at least one full- or part-time employee.1 When looking at the financial challenges of small businesses, the report covered the second half of 2015 through the second half of 2016.
Among all firms, 61 percent reported facing financial challenges over this time period. Financial challenges included:
Firms with smaller annual revenue were more likely to experience financial challenges. Of firms with $1 million or less, 67 percent reported facing financial challenges, compared to only 47 percent of firms with more than $1 million.
The figure below shows the breakdown of which financial challenges were most prevalent among small businesses.
The survey also asked small businesses how they addressed these issues. Their responses are captured in the figure below. (It should be noted that respondents could also answer “unsure” and “other,” and those responses are not captured below.)
1 This does not include self-employed or firms where the owner is the only employee.