Emily Wavering Corcoran et al., 2023 Report on Employer Firms: Findings from the 2022 Small Business Credit Survey (2023)
Summary
2023 Report on Employer Firms from the Federal Reserve Banks, published March 2023, presenting findings from the 2022 Small Business Credit Survey. The report team was Emily Wavering Corcoran, Jordan Manes, Lucas Misera and Ann Marie Wiersch of the Federal Reserve Bank of Cleveland. The report's key statistics table shows 40.3 percent of employer firms applied for a loan, line of credit or cash advance, 72.1 percent had outstanding debt, and the approval rate was 79.2 percent. It also shows 44.4 percent had revenue growth in the prior 12 months and 57.0 percent described themselves as in fair or poor condition. Because the survey is not a probability-based sample, the report gives model-based credibility intervals.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“Emily Wavering Corcoran et al., 2023 Report on Employer Firms: Findings from the 2022 Small Business Credit Survey (2023).”
Original at www.fedsmallbusiness.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/emily-wavering-corcoran-et-al-2023-report-on-employer-firms-findings-f-b3c15aed40/
, SHA-256 74f50eeab92ae0f642a7c1f1460816daff16eba66fb79c796d64832894a6b5bf.Full text
ISSN 2831-4034 | https://doi.org/10.55350/sbcs-20230308
2023 REPORT ON EMPLOYER FIRMS:
FINDINGS FROM THE 2022
SMALL BUSINESS CREDIT SURVEY
PUBLISHED MARCH 2023
F E DE R A L R E SE RV E BA N K S of
Atlanta • Boston • Chicago • Cleveland • Dallas • Kansas City • Minneapolis
New York • Philadelphia • Richmond • St. Louis • San Francisco
ACKNOWLEDGMENTS
REPORT TEAM 1
Emily Wavering Corcoran, Federal Reserve Bank of Cleveland
Jordan Manes, Federal Reserve Bank of Cleveland
Lucas Misera, Federal Reserve Bank of Cleveland
Ann Marie Wiersch, Federal Reserve Bank of Cleveland
Please direct media inquiries to Doug Campbell at doug.campbell@clev.frb.org.
Please direct inquiries about research and data in this report to Emily Wavering Corcoran, Small Business Credit Survey program manager,
at emily.corcoran@clev.frb.org.
The Small Business Credit Survey is made possible through collaboration with business and civic organizations in communities across the
United States. The Federal Reserve Banks thank the national, regional, and community partners who share valuable insights about small
business financing needs and collaborate with us to distribute and promote the survey.²
Special thanks to colleagues within the Federal Reserve System, especially the community affairs officers, for their ongoing support for
the SBCS. The 2022 SBCS is the result of the collaborative effort and input of the following individuals in the Federal Reserve System.
NATIONAL SBCS TEAM OUTREACH LIAISONS
Emily Wavering Corcoran, Federal Reserve Bank of Cleveland Saniha Aziz, Federal Reserve Bank of Dallas
Grace Guynn, Federal Reserve Bank of Atlanta Alaina Barca, Federal Reserve Bank of Philadelphia
Jordan Manes, Federal Reserve Bank of Cleveland Leilani Barnett, Federal Reserve Bank of San Francisco
Lucas Misera, Federal Reserve Bank of Cleveland Surekha Carpenter, Federal Reserve Bank of Richmond
Amber Sherman, Federal Reserve Bank of Cleveland Brian Clarke, Federal Reserve Bank of Boston
Maria Thompson, Federal Reserve Bank of Cleveland Emily Engel, Federal Reserve Bank of Chicago
Ann Marie Wiersch, Federal Reserve Bank of Cleveland Dell Gines, Formerly of the Federal Reserve Bank of Kansas City
Nicholas Haltom, Federal Reserve Bank of Richmond
SURVEY ADVISORS Mary Hirt, Federal Reserve Bank of Atlanta
Claire Kramer Mills, Federal Reserve Bank of New York Michou Kokodoko, Federal Reserve Bank of Minneapolis
Mark Schweitzer, Federal Reserve Bank of Cleveland Lisa Locke, Federal Reserve Bank of St. Louis
Michelle Luevano, Federal Reserve Bank of Dallas
Erin Mierzwa, Federal Reserve Bank of Philadelphia
Drew Pack, Federal Reserve Bank of Cleveland
Emily Perlmeter, Federal Reserve Bank of Dallas
Ashley Putnam, Federal Reserve Bank of Philadelphia
Janelle Williams, Formerly of the Federal Reserve Bank of Atlanta
The views expressed in this report are those of the authors and not necessarily those of the Federal Reserve Bank of Cleveland or the Federal Reserve System.
Data used in this report may be subject to updates or changes.
1 The report team appreciates the thoughtful comments and guidance from the following Federal Reserve System colleagues: Mary Hirt from the Federal Reserve
Bank of Atlanta; Mark Schweitzer from the Federal Reserve Bank of Cleveland; Claire Kramer Mills from the Federal Reserve Bank of New York; and Barbara
Lipman from the Board of Governors of the Federal Reserve System. Thank you to Heather Ann and Paula Austin of the Federal Reserve Bank of Cleveland for
publication review and report design.
2 For a full list of community partners, please visit www.fedsmallbusiness.org.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS
TABLE OF CONTENTS
i EXECUTIVE SUMMARY 13 FINANCING APPLICATIONS
13 Applications for Loans, Lines of Credit, and
iii NOTES AND DEFINITIONS Cash Advances
14 Loan/Line of Credit/Cash Advance Products
1 PERFORMANCE AND CHALLENGES
and Sources
1 Firm Performance, Prior 12 Months
15 Loan/Line of Credit/Cash Advance Sources
2 Firm Profitability
17 Loan/Line of Credit/Cash Advance Application
3 Revenue and Employment Expectations, Outcomes
Next 12 Months
18 Loan/Line of Credit/Cash Advance Approval Over
4 Operational Challenges Time
5 Workforce Challenges 19 Loan/Line of Credit/Cash Advance Approval Rates
by Source
7 Financial Challenges
21 Satisfaction with Lenders
8 DEBT AND FINANCING 22 Challenges with Lenders
8 Debt Outstanding
23 DEMOGRAPHICS
9 Financial Services Providers
10 Use of Personal Funding Sources 26 METHODOLOGY
11 Demand for Financing
12 PANDEMIC-RELATED FINANCIAL
ASSISTANCE
12 Funding Sought and Received
SUGGESTED CITATION
“2023 Report on Employer Firms: Findings from the 2022 Small Business Credit Survey.” 2023.
Small Business Credit Survey. Federal Reserve Banks.
https://doi.org/10.55350/sbcs-20230308
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS
EXECUTIVE SUMMARY
INTRODUCTION
The Small Business Credit Survey (SBCS), The 2022 survey also marks the first since n Despite increases in performance indices
a collaboration of all 12 Federal Reserve 2020 in which firms were more likely to say and profitability year-over-year, firms’
Banks, provides timely information about they sought traditional financing rather than self-reported financial condition remains
small business conditions to policymakers pandemic-related funding. As pandemic- little-changed from 2021. Seventeen
and service providers. In 2022, the survey related funding programs ended, the data percent of firms reported that they were
reached nearly 8,000 employer small show an accompanying rise in the share of in “very good” or “excellent” financial
businesses, collecting information about firms that sought traditional financing in the condition in the 2022 survey, an increase
the performance, challenges, and credit- form of loans, lines of credit, or merchant of just one percentage point from 2021.
seeking experiences of firms across the cash advances. The share of these
applicants that were fully approved rose n Between 2021 and 2022, the net share
United States.
year-over-year but lags prepandemic levels. of firms expecting revenue growth in the
Fielded September through November next 12 months fell from 42% to 35% and
2022, the most recent SBCS was the third remains significantly below prepandemic
conducted since the COVID-19 pandemic levels. The net share of firms anticipating
began in early 2020. While the 2020 and
SURVEY FINDINGS growth in employment levels also
2021 surveys highlighted the devastating declined, falling from 31% in 2021 to 27%
The 2022 SBCS yielded 7,864 responses
effects of the pandemic on small employer in 2022.
from a nationwide convenience sample of
firms, the 2022 survey shows promising small employer firms with 1–499 full- or Almost every firm in the survey
signs that some trends are returning to part-time employees (hereafter “firms”) experienced at least one operational or
prepandemic norms. For the first time across all 50 states and the District of financial challenge in the prior 12 months.
since the 2020 survey, firms in the SBCS Columbia. This publication summarizes
were more likely to report that revenues data for firms that were currently operating n Ninety-four percent of firms reported
and employment levels increased rather or temporarily closed at the time of the an operational challenge. Sixty percent
than decreased in the past 12 months, and survey. Permanently closed firms are not reported challenges associated with
the share of firms reporting that they were included in the sample for this report. hiring or retaining qualified staff, and
operating profitably rose substantially year-
60% reported supply chain issues.
over-year. Revenue, employment, and profitability
each improved from 2021, but expectations n Additionally, 94% of firms experienced
Still, there are signs of uncertainty among worsened year-over-year. a financial challenge in the 12 months
respondents: Firms in the most recent
prior to the survey. Most commonly,
survey remain less likely than firms in n For the second consecutive year,
firms reported challenges with rising
prepandemic surveys to expect revenue performance indices for revenue and
costs of goods, services, and/or wages
or employment growth in the coming employment growth increased from
(81%), followed by difficulties paying
year. Additionally, firms reported the lows in the 2020 survey. Still, both
operating expenses (54%) and navigating
persistence of challenges, both financial performance indices remain substantially
uneven cash flows (54%).
and operational. Financially, around four beneath those from prepandemic
in five firms cited challenges related to surveys. n In response to hiring challenges,
rising costs, and close to half of firms firms were more likely in 2022 than in
reported difficulties paying operating n The share of firms operating at a profit
2021 to make changes to employee
expenses or navigating uneven cash flows. rose from 35% in the 2021 survey to 45%
compensation (for example, raising
Nearly all firms also reported some type in the 2022 survey. Profitability improved
wages or enhancing non-wage
of operational challenge. Specifically, for both the smallest- and largest-revenue
compensation) and less likely to reduce
firms most often struggled to hire or retain firms in the survey, and firms within nearly
business operations or add to their
qualified staff or deal with issues in their every industry classification were more
employees’ workload.
supply chains. likely to report operating at a profit in the
2022 survey than in the prior survey.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS i
EXECUTIVE SUMMARY
(Continued)
When asked about funding sources used The application rate for traditional ABOUT THE SURVEY
over the past five years, firms were more financing rebounded to prepandemic
likely to use personal and government levels. The share of firms fully approved The SBCS is an annual survey of firms
sources than funding from financial increased from 2021 but remains lower with fewer than 500 employees. These
institutions. than in 2019. types of firms represent 99.7% of all
employer establishments in the United
n Two-thirds of firms (66%) used the n While applications for pandemic-related States.³ Respondents are asked to
owner’s personal savings or funding financial assistance declined, the share report information about their business
from friends or family in the past five of firms that applied for a traditional performance, financing needs and choices,
years. Over half of firms (55%) used loan, line of credit, or merchant cash and borrowing experiences. Responses to
government funding over the same advance increased to 40% in 2022, up the SBCS provide insights on the dynamics
period, and another 51% funded their from 25% in 2021. Firms’ top reason for behind lending trends and shed light on
business through a financial institution seeking credit was to meet operating various segments of the small business
or lender. expenses, though the reason with the population. The SBCS is not a random
biggest year-over-year increase was sample; results should be analyzed with
n Younger, smaller-revenue firms were business expansion. awareness of potential biases that are
more likely than their counterparts to associated with convenience samples.
rely on funding from an owner’s personal n The share of loan, line of credit, and For detailed information about the survey
savings or funding from friends or cash advance applicants that were fully design and weighting methodology, please
family, as were women-owned firms and approved rose to 53% in 2022 from 46% consult the Methodology section.
firms owned by people of color.¹ in 2021. Still, the share of applicants that
were fully approved remains below the
n Reliance on government funding sources 62% that were fully approved in 2019.
declined as pandemic-related funding
programs ended. While 91% and 77% n Applicants at small banks were most
of firms sought pandemic-related likely to receive at least partial approval
financial assistance in 2020 and 2021, of their applications (82%), followed
respectively, just 34% of firms sought by applicants at finance companies
assistance in 2022. and online lenders (76% and 71%,
respectively).
n The most common program from which
firms sought assistance in the prior n Among applicants that were approved,
12 months was the Small Business firms that applied to small banks
Administration’s Economic Injury were most satisfied, as 81% reported
Disaster Loan (EIDL) program. Twenty- they were satisfied with their lending
three percent of firms sought an EIDL experiences. Conversely, online lender
loan in 2022.² applicants were least satisfied, with just
48% reporting they were satisfied with
their experiences at their lenders.
1 The SBCS uses US Census-defined categories of race and ethnicity. Throughout this report, we use simplified, mutually exclusive race/ethnicity labels to indicate
that more than 50% of the business is held by owner(s) of the given race/ethnicity. "White" refers to non-Hispanic white, Middle Eastern, or North African; "Black"
refers to non-Hispanic Black or African American; "Asian" refers to non-Hispanic Asian or Pacific islander; "American Indian or Alaskan Native" refers to non-
Hispanic American Indian or Alaskan Native; and “Hispanic” refers to all firms owned by individuals of Hispanic or Latino ethnicity, regardless of their race.
2 Since the start of the pandemic, the SBA distributed $390 billion in EIDL loans, though applications for pandemic-affected applicants closed in early 2022.
Unlike the SBA’s Paycheck Protection Program loans, EIDL loans are not forgivable and carry an interest rate of 3.75%. For more on the COVID-19 EIDL program,
see the SBA website.
3 US Census Bureau, County Business Patterns, 2020.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS ii
NOTES AND DEFINITIONS
TIME REFERENCES
Survey questions in the SBCS ask respondents to reference specific time periods. Most questions ask about respondents’ experiences
in the 12 months prior to the time of their response. In some cases, questions ask about conditions at the time of their response. Finally,
some questions ask about respondents’ expectations in the 12 months following the time of their response. The time periods referenced
in the survey are defined as follows throughout this report:
Prior 12 Months. The 12 months prior to the fielding of the survey. For the 2022 SBCS, this is approximately September–November 2021
through September–November 2022.
At Time of Survey. September through November 2022.
Next 12 Months. The 12 months following the fielding of the survey. For the 2022 SBCS, this is approximately September–November 2022
through September–November 2023.
FINANCIAL SERVICES PROVIDERS AND LENDERS
Questions in the SBCS ask respondents about their use of and experiences with lenders and other financial services providers. Because
respondents may not have a uniform understanding of the terms used in the SBCS, the questionnaire provides examples and explanatory
information about the response options.¹ The financial services providers, lenders, and lender categories referenced in the survey are
defined as follows:
Large bank, small bank. Large banks are defined as those with at least $10B in total deposits; small banks are those with less than $10B
in total deposits. For applicable questions, respondents are shown a list of large banks operating in their state to assist them with proper
classification of their institution.
Finance company. Finance companies are nonbanks that provide loans, leases, and other financial services. Examples include mortgage
companies, equipment dealers, insurance companies, and auto finance companies.
Financial company that is not a bank. Examples include payroll services and payments processing companies, fintech lenders, and
finance companies.
Financial institution or lender. This category includes all bank or nonbank financial intermediaries, such as banks, finance companies,
online lenders, and credit unions.
Government funding sources. Examples include the Small Business Administration (SBA), the US Department of Agriculture (USDA), and
state agencies.
Online lender/fintech lender. Online lenders/fintech lenders are nonbanks that operate online. Examples include OnDeck, CAN Capital,
Paypal Working Capital, and Kabbage.
Community development financial institution (CDFI). CDFIs are financial institutions that provide credit and financial services to
underserved markets and populations. CDFIs are certified by the CDFI Fund at the US Department of the Treasury.
CREDIT RISK
Credit risk is determined by the self-reported business credit score or personal credit score, depending on which is used to obtain
financing for the business. If a firm uses both, the weaker score is used. “Low credit risk” is an 80–100 business credit score or 720+
personal credit score. “Medium credit risk” is a 50–79 business credit score or a 620–719 personal credit score. “High credit risk” is a
1–49 business credit score or a <620 personal credit score.
1 See SBCS questionnaire for more details.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS iii
PERFORMANCE AND CHALLENGES
Firm Performance, Prior 12 Months
Firm performance improved in 2022, but revenue and employment growth
remain below prepandemic levels.
EMPLOYER FIRM PERFORMANCE, 2022 Survey 1 (% of employer firms)
REVENUE CHANGE, Prior 12 Months N=7,589 EMPLOYMENT CHANGE, Prior 12 Months N=7,538
Increased 44% Increased 29%
No change 18% No change 48%
Decreased 38% Decreased 23%
EMPLOYER FIRM PERFORMANCE INDEX, Prior 12 Months 1,2 (% of employer firms)
— Revenue growth
28%
35% 34% — Employment growth
23% 21% 7%
19%
-9% 6%
-10%
-33%
-63%
2017 Survey 2018 Survey 2019 Survey 2020 Survey 2021 Survey 2022 Survey
N=7,684–7,983 N=6,176–6,438 N=4,810–4,983 N=9,392–9,561 N=10,571–10,617 N=7,538–7,589
1 See Notes and Definitions for details on time period definitions used in the SBCS.
2 The index is the share reporting growth minus the share reporting a reduction in the prior 12 months. Because of rounding, the 2022 revenue index is not equal to
the difference between the shares shown for firms reporting growth and firms reporting a reduction. Questions were asked separately; therefore, the number of
observations may differ slightly between questions.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 1
PERFORMANCE AND CHALLENGES
Firm Profitability
Firm profitability improved year-over-year between the 2021 and 2022 surveys,
but firms’ self-reported financial condition is little-changed.
SHARE OF FIRMS OPERATING PROFITABLY, By Survey Year 1 (% of employer firms)
2021 Survey
(Profitability at the end of 2020)
All firms N=10,213 and 7,503 35% 45% 2022 Survey
(Profitability at the end of 2021)
By industry
Leisure and hospitality 14% 25%
N=1,647 and 1,161
Healthcare and education 29% 36%
N=1,345 and 1,055
Manufacturing 40% 51%
N=1,066 and 860
By firm revenue size
<$100K 13% 21%
N=2,484 and 1,717
$100K–$1M 44%
N=4,889 and 3,622
34%
$1M–$10M 52% 63%
N=2,336 and 1,787
>$10M 77% 83%
N=413 and 310
FINANCIAL CONDITION, At Time of Survey 2 (% of employer firms)
Poor Fair Good Very good Excellent
2020 Survey
N=9,664 24% 34% 25% 11% 6%
2021 Survey
N=10,907 21% 38% 25% 11% 5%
2022 Survey
N=7,864 19% 38% 27% 11% 6%
1 Select industries shown. Revenue size categories have been condensed and simplified for readability. Actual categories are ≤$25K, $25,001–$50K, $50,001–
$100K, $100,001–$250K, $250,001– $500K, $500,001–$1M, $1,000,001–$5M, $5,000,001–$10M, and >$10M. See Appendix for more details. Number of
observations varies by year; number of observations for 2021 shown first.
2 Self-reported financial condition at time of survey. See Notes and Definitions for details on time period definitions used in the SBCS. Percentages may not sum to
100 because of rounding.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 2
PERFORMANCE AND CHALLENGES
Revenue and Employment Expectations, Next 12 Months
Expectations for revenue and employment growth in the next 12 months
declined from last year’s survey and remain lower than prepandemic levels.
EMPLOYER FIRM EXPECTATIONS, 2022 Survey 1,2 (% of employer firms)
EXPECTED REVENUE CHANGE, N=7,674 EXPECTED EMPLOYMENT CHANGE, N=7,599
Next 12 Months Next 12 Months
Will increase 56% Will increase 39%
Will not change 22% Will not change 50%
Will decrease 21% Will decrease 12%
EMPLOYER FIRM EXPECTATIONS INDEX, Next 12 Months 2,3 (% of employer firms)
— Revenue growth expectations
— Employment growth expectations
64% 63%
58%
42%
35%
43%
38% 38%
31%
16% 27%
1%
2017 Survey 2018 Survey 2019 Survey 2020 Survey 2021 Survey 2022 Survey
N=7,736–8,073 N=6,450–6,480 N=4,967–5,024 N=9,412–9,616 N=10,635–10,692 N=7,599–7,674
1 Percentages may not sum to 100 because of rounding.
2 See Notes and Definitions for details on time period definitions used in the SBCS.
3 The index is the share expecting growth minus the share expecting a reduction in the next 12 months. Questions were asked separately; therefore, the number of
observations may differ slightly between questions.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 3
PERFORMANCE AND CHALLENGES
Operational Challenges
Firms’ most common operational challenges were hiring or retaining workers
and supply chain disruptions.
OPERATIONAL CHALLENGES, Prior 12 Months 1,2 (% of employer firms) N=7,817
Hiring or retaining qualified staff 60%
Supply chain issues 60%
Reaching customers/growing sales 51%
Complying with government regulations 29%
Utilizing technology 27%
Ensuring health/safety of customers 18%
or employees
Did not experience any operational challenges 6%
While firms were about as likely to attempt to hire in 2022 as in 2021, a
smaller share said hiring new workers was very difficult.
DIFFICULTY HIRING NEW WORKERS, Prior 12 Months, By Survey Year 2,3 (% of employer firms)
Attempted to hire, very difficult
Attempted to hire, somewhat difficult
27%
Attempted to hire, not difficult
44% 40%
Did not attempt to hire
27%
27%
24%
17%
7% 10%
29% 25% 23%
2018 Survey 2021 Survey 2022 Survey
N=4,090 N=7,960 N=5,712
1 “Complying with government regulations” includes pandemic-related mandates. “Utilizing technology” includes e-commerce, cyber security, social media, and
website issues. Respondents could select multiple options. Response option “other” not shown. See Appendix for more details.
2 See Notes and Definitions for details on time period definitions used in the SBCS.
3 Data on hiring and related challenges were drawn from an optional end-of-survey workforce module (78% of employer firm respondents opted to answer in 2022).
This subset of respondents is re-weighted to be reflective of the overall small-firm population. Workforce module questions were not asked in 2019 or 2020.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 4
PERFORMANCE AND CHALLENGES
Workforce Challenges
Among firms facing hiring challenges, the most frequently cited reasons
centered on attracting applicants for open positions.
REASONS FOR DIFFICULTY HIRING WORKERS, 2022 Survey 1 N=4,093
(% of employer firms reporting that hiring workers was very or somewhat difficult)
Too few applicants 72%
Applicants lack job-specific skills, education, 62%
or experience
Competition from other employers 40%
Difficulty retaining newly hired workers 34%
Applicants unable to pass background check, 16%
credit check, or drug test
Other reasons 3%
The share of firms that increased wages in response to hiring challenges rose
year-over-year, while the share of firms that made operational changes declined.
ACTIONS TAKEN IN RESPONSE TO DIFFICULTIES HIRING OR RETAINING WORKERS, N=4,702
Prior 12 Months 1,2 (% of employer firms reporting that hiring and/or retaining workers was very or somewhat difficult)
Changes to
employee Changes to Changes to
compensation operations hiring practices
Percentage point
change from
-4% -8%
2021 Survey
+6% +4% +5% +1% +1%
65%
2022
52%
Survey
44%
26% 29%
24% 22%
Increased Enhanced Increased Reduced Increased Made hiring Offered remote
wages benefits or workload for operations efforts to find requirements work and/
non-wage employees applicants less strict or flexible
compensation and/or owners scheduling
1 Data on hiring and related challenges were drawn from an optional end-of-survey workforce module (78% of employer firm respondents opted to answer in 2022).
This subset of respondents is re-weighted to be reflective of the overall small-firm population. Respondents could select multiple options.
2 Select response options shown. See Appendix for more details.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 5
PERFORMANCE AND CHALLENGES
Workforce Challenges (Continued)
Across firm size and industry categories, firms were more likely in 2022 to
increase wages in response to hiring challenges than they were in 2021.
Larger firms were more likely than smaller firms to increase wages.
SHARE OF FIRMS THAT RAISED WAGES IN RESPONSE TO DIFFICULTIES HIRING OR RETAINING
WORKERS, Prior 12 Months 1 (% of employer firms reporting that hiring and/or retaining workers was very or somewhat difficult)
2021 Survey
By firm employee size 2022 Survey
1–4 employees 46% 52%
N=2,428 and 1,766
5–49 employees 69% 75%
N=3,849 and 2,699
50–499 employees 84% 91%
N=383 and 267
By industry
Manufacturing 65% 74%
N=694 and 533
Leisure and hospitality 67% 72%
N=1,194 and 798
Retail 56% 64%
N=707 and 501
Healthcare and education 60% 64%
N=885 and 671
Professional services 49% 58%
and real estate
N=1,036 and 726
1 Select industries shown. See Appendix for more details. See Notes and Definitions for details on time period definitions used in the SBCS. Data on hiring and
related challenges were drawn from an optional end-of-survey workforce module (78% of employer firm respondents opted to answer in 2022).
This subset of respondents is re-weighted to be reflective of the overall small-firm population. Number of observations varies by year; number of observations
for 2021 shown first.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 6
PERFORMANCE AND CHALLENGES
Financial Challenges
Rising costs of goods, services, and wages were the most commonly reported
financial challenge.
FINANCIAL CHALLENGES, Prior 12 Months 1 (% of employer firms) N=7,837
81% 54%
Paying
47% 27%
Rising costs of Weak sales Credit
goods, services, operating availability
and/or wages expense
54%
Uneven
cash flow
32% 6%
Making payments None
on debt
ACTIONS TAKEN IN RESPONSE TO FINANCIAL CHALLENGES, Prior 12 Months 1 N=7,493
(% of employer firms with financial challenges)
Raised prices the business charges 56%
Used personal funds 53%
Used cash reserves 53%
Obtained funds that must be repaid 42%
Cut staff, hours, and/or downsized operations 32%
Made a late payment or did not pay 23%
Obtained funds that do not have to be repaid 18%
No action 5%
1 See Notes and Definitions for details on time period definitions used in the SBCS. Respondents could select multiple options. Response option “other” not shown.
See Appendix for more details.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 7
DEBT AND FINANCING
Debt Outstanding
Though the share of firms with outstanding debt has nearly returned to
prepandemic levels, the share of firms holding larger amounts of debt—more
than $100K—remains higher than in 2019.
AMOUNT OF OUTSTANDING DEBT, At Time of Survey, By Survey Year 1,2 (% of employer firms)
No outstanding debt
30% 29% 21% 26% 28%
<$100K
>$100K
35%
40% 34% 32%
38%
45%
40% 40%
32% 31%
2018 Survey 2019 Survey 2020 Survey 2021 Survey 2022 Survey
N=6,451 N=5,063 N=9,443 N=10,679 N=7,708
AMOUNT OF OUTSTANDING DEBT, At Time of 2022 Survey 1,2 (% of employer firms) N=7,708
60% hold $100K or less 40% hold more than $100K
28%
17%
16%
13%
10%
8%
7%
No outstanding ≤$25K $25K–$50K $50K–$100K $100K–$250K $250K–$1M >$1M
debt
1 Respondents were instructed to exclude loans they expected would be forgiven from their outstanding debt (for example, PPP loans).
See Notes and Definitions for details on time period definitions used in the SBCS.
2 Categories have been simplified for readability. Actual categories are ≤$25K, $25,001–$50K, $50,001–$100K, $100,001–$250K, $250,001–$1M, and
>$1M. Percentages may not sum to 100 because of rounding.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 8
DEBT AND FINANCING
Financial Services Providers
87% of firms use either a large or small bank as a financial services provider.
USE OF FINANCIAL SERVICES PROVIDERS 1,2 (% of employer firms) N=7,835
Large bank 56%
Small bank 43%
Financial company that is not a bank 24%
Credit union 13%
Other 3%
None, business does not use financial 4%
services
Reliance on personal sources and government funding has increased since 2019.
SOURCES OF FUNDING, Past Five Years, By Survey Year 2,3 (% of employer firms)
— Financial institution or lender
66%
62% — Owner’s personal savings, friends, or family
56% 55%
— Did not obtain any funds from outside the business
51%
— Nonprofit/community-based funding source
— Other source
— Government funding sources*
15%
8%
5% * Given the introduction of large pandemic-related
5%
4% funding programs, “government funding sources”
1% was added as a discrete answer choice in the 2022
survey. In 2019, government sources were accounted
2019 Survey 2022 Survey
N=5,148 N=7,823 for in the “other source” category.
1 Financial services providers are those at which the firm has an account or uses other financial services, including loans and payments processing.
See Notes and Definitions for details on financial services provider definitions used in the SBCS.
2 Respondents could select multiple options.
3 The question about sources of funding used in the past five years was asked most recently in the 2019 SBCS. The response options were updated in 2022,
so some source categories are combined to show the comparison across years.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 9
DEBT AND FINANCING
Use of Personal Funding Sources
Younger, smaller-revenue firms were more likely than their counterparts to rely
on funds from an owner’s personal savings or funds from friends or family.
SHARE OF FIRMS THAT RELIED ON FUNDS FROM THE OWNER’S PERSONAL SAVINGS, FRIENDS,
OR FAMILY IN PAST FIVE YEARS, 2022 Survey 1 (% of employer firms)
By age of firm
0–5 years N=2,064 83%
6–20 years N=3,446 63%
21+ years N=2,313 51%
By firm revenue size
<$100K N=1,789 81%
$100K–$1M N=3,740 68%
$1M–$10M N=1,812 53%
>$10M N=312 35%
By race/ethnicity of owner(s)
Black N=1,456 79%
Hispanic N=908 72%
Asian N=563 70%
White N=4,761 65%
American Indian or Alaskan 56%
Native N=135
By gender of owner(s)
Women-owned N=3,483 74%
Men-owned N=3,532 64%
By age of firm’s primary owner
Under 45 N=1,609 77%
45–64 N=4,422 66%
65+ N=1,424 58%
1 Select firm categories shown. See Appendix for more details. Revenue size categories have been condensed and simplified for readability. Actual categories are
≤$25K, $25,001–$50K, $50,001–$100K, $100,001–$250K, $250,001–$500K, $500,001–$1M, $1,000,001–$5M, $5,000,001–$10M, and >$10M.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 10
DEBT AND FINANCING
Demand for Financing
APPLICATIONS FOR FINANCING
As shown on page 9, small businesses turned to a wide range of funding sources during the last five years, and these sources have
changed considerably since 2019. During the COVID-19 pandemic, firms sought and received funds through various large government
programs. At the same time, the financial struggles of many small businesses meant that some were unable to qualify for traditional
financing. Additionally, firms engaging with financial services providers interacted with their providers in new ways—and in some cases,
with new providers—as services were increasingly offered online.
With the changes in the small business credit environment, the Small Business Credit Survey questionnaire has evolved to better assess
small firms’ experiences.¹ Changes to the questionnaire affect the year-over-year comparability of certain metrics. In some cases,
questions yielded unexpected results that require deeper investigation. As such, this report focuses on findings for firms’ experiences with
the most common forms of financing—specifically, applications for loans, lines of credit, and merchant cash advances—as that portion of
the questionnaire was little-changed from past years.²
40% of employer firms 34% of employer firms
sought loans, lines of credit, sought pandemic-related
or cash advances in the financial assistance in the
prior 12 months. prior 12 months.
PERFORMANCE OF APPLICANT AND NONAPPLICANT FIRMS 3 (% of applicants and nonapplicants)
Applicants N=2,780–5,162
Nonapplicants N=1,766–2,702
85%
78% 80%
61%
51%
41%
26%
17%
Profitable In at least fair Low credit risk Growing
financial condition
1 See Methodology for an explanation of changes to the 2022 questionnaire.
2 For brevity, merchant cash advances are referred to as cash advances throughout the report.
3 Applicant firms include only those firms that sought loans, lines of credit, or cash advances in the prior 12 months. Profitability is as of the end of 2021.
See Notes and Definitions for details on credit risk definitions used in the SBCS. Growing firms are defined as those that increased revenues and employees in the
prior 12 months and that plan to increase or maintain their number of employees over the next 12 months. Number of observations varies by question.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 11
PANDEMIC-RELATED FINANCIAL ASSISTANCE
Funding Sought and Received
Firms continued to rely on pandemic-related financial assistance, though as
programs became less available, fewer firms turned to these programs than in
the past two years.
SHARE OF FIRMS THAT SOUGHT FINANCIAL SHARE OF FIRMS THAT RECEIVED FINANCIAL
ASSISTANCE, Prior 12 Months 1 (% of employer firms) ASSISTANCE, Prior 12 Months 1 (% of employer firms)
91% 87%
77%
66%
34%
31%
2020 Survey 2021 Survey 2022 Survey 2020 Survey 2021 Survey 2022 Survey
N=9,565 N=10,760 N=7,864 N=9,357 N=10,583 N=7,755
TYPES OF FINANCIAL ASSISTANCE SOUGHT, Prior 12 Months 1,2 (% of employer firms) N=7,864
EIDL loan 23%
According to the SBA, small businesses have received
approximately $390 billion in EIDL loans since the start
Grant from state/local government funds of the pandemic. These loans have a 3.75% interest
19%
rate, and repayment begins 24 months after the
proceeds are disbursed.
EIDL advance 12%
SBCS data indicate that Asian-owned firms and leisure
and hospitality firms are among the most likely to
6% have sought EIDL loans (36% and 37%, respectively,
Grant from nonprofit foundation
compared to 23% of all employer firms).
Loan from state/local government funds 5%
Did not seek pandemic-related financial 66%
assistance
1 "Financial assistance” includes all forms of pandemic-related financial assistance available in the 12 months prior to the survey (for example, PPP, EIDL, state/
local loan and grant programs). See Notes and Definitions for details on time period definitions used in the SBCS.
2 Respondents could select multiple options.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 12
FINANCING APPLICATIONS
Applications for Loans, Lines of Credit, and Cash Advances
In 2022, applications for the most common types of traditional financing—loans,
lines of credit, and cash advances—rebounded above prepandemic levels.
SHARE OF FIRMS THAT APPLIED FOR LOANS, LINES OF CREDIT, OR CASH ADVANCES,
Prior 12 Months, By Survey Year 1 (% of employer firms)
40%
36% 37%
34%
28%
25%
2017 Survey 2018 Survey 2019 Survey 2020 Survey 2021 Survey 2022 Survey
N=8,169 N=6,614 N=5,154 N=9,407 N=10,580 N=7,864
REASONS FOR APPLYING, Prior 12 Months, By Survey Year 1,2 (% of loan, line of credit, and cash advance applicants)
65% — Meet operating expenses
63%
59% — Expand business, pursue
56% 56% new opportunities, or
53% acquire business assets
47%
45% — Replace capital assets or
44% make repairs
39%
— Refinance or pay down debt
32% 33% 32%
29% 35%
29% 28%
22%
20%
18%
2018 Survey 2019 Survey 2020 Survey 2021 Survey 2022 Survey
N=2,526 N=2,036 N=2,773 N=2,693 N=3,331
1 Excludes pandemic-related financial assistance applications. See Notes and Definitions for details on time period definitions used in the SBCS.
2 Respondents could select multiple options. For comparability of 2022 data with past survey years, this chart shows experiences of loan, line of credit, and cash
advance applicants and, as such, may differ slightly from similar charts in past reports that showed findings for all applicants.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 13
FINANCING APPLICATIONS
Loan/Line of Credit/Cash Advance Products and Sources
APPLICATION RATE BY TYPE OF LOAN, LINE OF CREDIT, OR CASH ADVANCE 1 N=3,320
(% of loan, line of credit, and cash advance applicants)
Line of credit 43%
Business loan 34%
SBA loan or line of credit 23%
Auto or equipment loan 12%
Personal loan 7%
Merchant cash advance 7%
Mortgage 5%
Home equity line of credit 5%
Applicants were more likely to seek financing at large banks than at other sources.
CREDIT SOURCES APPLIED TO 1,2 (% of loan, line of credit, and cash advance applicants) N=3,226
43%
30%
22%
13%
8% 4%
Large bank Small bank Online lender Finance company Credit union CDFI
1 Respondents could select multiple options. Excludes pandemic-related financial assistance applications. Response option “other” not shown.
See Appendix for more details.
2 See Notes and Definitions for details on time period definitions and lender descriptions used in the SBCS.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 14
FINANCING APPLICATIONS
Loan/Line of Credit/Cash Advance Sources
CREDIT SOURCES APPLIED TO, By Survey Year 1 (% of loan, line of credit, and cash advance applicants)
— Large bank
43%
40% 40% — Small bank
— Online lender
35% 39%
33% — Finance company
33% 30%
— Credit union
30% — CDFI
22%
20%
17%
15% 15%
12% 13%
8%
7% 7% 7%
3% 4%
2% 3%
2019 Survey 2020 Survey 2021 Survey 2022 Survey*
N=1,901 N=2,574 N=2,607 N=3,226
* The survey methodology was revised in 2022 to enable more accurate identification of lender
types than in prior years. As such, the year-over-year changes in source application rates
reflect, in part, the more precise lender categorization. See Methodology for more details.
CREDIT SOURCES APPLIED TO, By Credit Risk of Firm, 2022 Survey 1,2 (% of loan, line of credit, and cash advance applicants)
Low credit risk
44% N=1,483
40%
37% Medium/high credit risk
34% N=1,206
20%
15% 14%
13%
10% 4% 4%
8%
Large bank Small bank Online lender Finance company Credit union CDFI
1 Select lenders shown. See Appendix for more details. Respondents could select multiple options. Excludes pandemic-related financial assistance applications.
In the 2022 survey, details on firms’ experiences with lenders were collected only for the two most recent applications. For comparison purposes, percentages
shown here from the 2019, 2020, and 2021 surveys include only firms’ two most recent applications; therefore, percentages may vary slightly from past reports.
See Notes and Definitions for details on lender descriptions used in the SBCS.
2 See Notes and Definitions for details on time period and credit risk definitions used in the SBCS.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 15
FINANCING APPLICATIONS
Loan/Line of Credit/Cash Advance Sources (Continued)
Bank applicants most often cited their existing relationship with their lender
as the top factor influencing where they applied. Online lender and finance
company applicants prioritized the speed of a decision or funding.
FACTORS INFLUENCING WHERE FIRMS APPLY 1 (% of loan, line of credit, and cash advance applicants at source)
63%
Existing relationship with lender 67%
32%
29%
29%
Chance of being funded 34%
48%
Online lender applicants
36%
chose their lender based
25% on the expected speed
25% of a decision or funding
Cost or interest rate
15% and their perceived
22% chance of being funded.
24%
Speed or decision of funding 30%
55%
39%
22%
No collateral was required 11%
46%
26%
18%
Recommendation or referral 17%
12%
16%
17%
18%
Flexibility of product
20%
21%
10%
9%
Denied by other lenders
27%
18%
Large bank N=1,380 Small bank N=796 Online lender N=782 Finance company N=393
1 Respondents could select multiple options. Select lenders and response options shown. See Appendix for more details. See Notes and Definitions for details on
lender descriptions used in the SBCS.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 16
FINANCING APPLICATIONS
Loan/Line of Credit/Cash Advance Application Outcomes
Approval rates on loan, line of credit, and merchant cash advance applications
improved year-over-year, but the share fully approved remains below
prepandemic levels.
OUTCOMES FOR LOAN, LINE OF CREDIT, OR CASH ADVANCE APPLICANTS, Prior 12 Months, By Survey Year 1,2
(% of loan, line of credit, and cash advance applicants)
34% Denied
24% 22% 19% 26% 21%
Partially approved
19% Fully approved
19% 21% 26%
23%
20%
62%
57% 58%
50% 53%
46%
2017 Survey 2018 Survey 2019 Survey 2020 Survey 2021 Survey 2022 Survey
N=2,695 N=2,297 N=1,835 N=2,433 N=2,426 N=3,026
SHARE OF APPLICANTS AT LEAST PARTIALLY APPROVED BY TYPE OF LOAN, LINE OF CREDIT, OR
CASH ADVANCE 2,3 (% of loan, line of credit, and cash advance applicants)
Merchant cash advance N=213 90%
Auto or equipment loan N=354 87%
Mortgage N=145 85%
Business line of credit N=1,256 76%
Personal loan N=201 70%
Business loan N=1,020 66%
SBA loan or line of credit N=702 64%
Home equity line of credit N=118 62%
1 See Notes and Definitions for details on time period definitions used in the SBCS. In the 2022 survey, details on firms’ experiences with lenders were collected
only for the two most recent applications. For comparison purposes, percentages shown here from the 2017–2021 surveys include only firms’ two most recent
applications; therefore, percentages may vary slightly from past reports.
2 Excludes pending applications and all applications for pandemic-related financial assistance.
3 Response option “other” not shown in chart. See Appendix for more details.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 17
FINANCING APPLICATIONS
Loan/Line of Credit/Cash Advance Approval Over Time
Of applicants that sought loans, lines of credit, and cash advances, Black-
owned firms and leisure and hospitality firms were among those least likely to
be fully approved in 2022. For most firm categories, financing approval rates
declined from prepandemic levels.
SHARE OF APPLICANTS THAT WERE FULLY APPROVED, By Survey Year 1
(% of loan, line of credit, and cash advance applicants)
2019 Survey
By race/ethnicity of owner(s)
2022 Survey
White 58% 66%
N=1,405 and 1,775
Hispanic 38% 46%
N=150 and 352
Asian 33% 46%
N=61 and 198
Black 20% 34%
N=192 and 651
By firm revenue size
<$100K 32% 50%
N=220 and 623
$100K–$1M 49% 61%
N=813 and 1,391
$1M–$10M 68% 70%
N=661 and 776
>$10M 83% 88%
N=109 and 185
By industry
Manufacturing 64% 67%
N=254 and 386
Professional services and
real estate N=364 and 521 54% 59%
Leisure and hospitality 36% 64%
N=176 and 414
1 Excludes pending applications and all application for pandemic-related financial assistance. Select firm categories shown. American Indian- and Alaskan Native-
owned firms not shown because of sample size limitations. Revenue size categories have been condensed and simplified for readability. Actual categories are
≤$25K, $25,001–$50K, $50,001–$100K, $100,001–$250K, $250,001–$500K, $500,001–$1M, $1,000,001–$5M, $5,000,001–$10M, and >$10M. See Appendix for
more details. Number of observations varies by year; number of observations for 2019 shown first.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 18
FINANCING APPLICATIONS
Loan/Line of Credit/Cash Advance Approval Rates by Source
Overall financing approval rates were highest at small banks; however,
medium- and high-credit-risk applicants were more likely to be approved at
nonbank lenders.
SHARE OF APPLICANTS AT LEAST PARTIALLY APPROVED 1 (% of loan, line of credit, and cash advance applicants at source)
Small bank N=760 82%
Finance company N=370 76%
Online lender N=755 71%
Large bank N=1,316 68%
Credit union N=246 65%
CDFI N=151 59%
SHARE OF APPLICANTS AT LEAST PARTIALLY APPROVED, By Credit Risk of Firm, By Source 1,2
(% of loan, line of credit, and cash advance applicants at source)
Low credit risk
N=185–633
Medium/high credit risk
N=140–483
88%
83%
78% 77%
65% 66%
61%
45%
Small bank Online lender Finance company Large bank
1 Excludes pending applications and all applications for pandemic-related financial assistance. Select lenders shown. See Appendix for more details.
See Notes and Definitions for details on lender descriptions used in the SBCS.
2 See Notes and Definitions for details on credit risk definitions used in the SBCS. Credit union and CDFI not shown because of sample size limitations.
See Appendix for more details. Number of observations varies by source.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 19
FINANCING APPLICATIONS
Loan/Line of Credit/Cash Advance Approval Rates by Source (Continued)
Approval rates increased in 2022 across sources.
SHARE OF APPLICANTS AT LEAST PARTIALLY APPROVED BY SOURCE, By Survey Year 1,2
(% of loan, line of credit, and cash advance applicants at source)
86% — Small bank
82% N=668–912
80% Finance company
76% —
76% 76% N=281–370
69% 71% — Online lender
73% N=379–755
68%
65% 69% — Large bank
68%
N=690–1,316
61% 54%
49%
2019 Survey 2020 Survey 2021 Survey 2022 Survey*
* The survey methodology was revised in 2022 to enable more accurate identification of lender types than in prior
years. For 2022 approval rates by source, the difference between these estimates and those generated with the
prior years' methodology are not statistically significant at the 5% level. See Methodology for more details.
SHARE OF APPLICANTS AT LEAST PARTIALLY APPROVED BY SOURCE, By Firm Revenue Size 2
(% of loan, line of credit, and cash advance applicants at source)
<$1M N=221–833
>$1M N=102–465
95%
90%
84% 83%
75%
71% 68%
59%
Small bank Online lender Finance company Large bank
1 In the 2022 survey, details on firms’ experiences with lenders were collected only for the two most recent applications. For comparison purposes, percentages
shown here from the 2019, 2020, and 2021 surveys include only firms’ two most recent applications; therefore, percentages may vary slightly from past reports.
See Methodology for more details on changes to the 2022 questionnaire and related implications for over-time comparisons.
2 Excludes pending applications and all applications for pandemic-related financial assistance. Select lenders shown. See Appendix for more details.
See Notes and Definitions for details on time period definitions and lender descriptions used in the SBCS. Samples vary between the charts on this page because
of nonresponse to the revenue question.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 20
FINANCING APPLICATIONS
Satisfaction with Lenders
Among applicant firms approved for at least some financing, small bank
applicants were most satisfied with their experiences, while online lender
applicants were least satisfied.
SATISFACTION WITH LENDERS 1,2 (% of loan, line of credit, and cash advance applicants approved for at least some financing at source)
Satisfied Neutral Dissatisfied
Small bank N=610 81% 15% 4%
Large bank N=852 68% 26% 6%
Finance company N=281 62% 29% 10%
Online lender N=519 48% 33% 19%
NET SATISFACTION, By Survey Year 2,3 (% of loan, line of credit, and cash advance applicants approved for at least some financing at source)
76% 77%
74% 74% — Small bank
70%
N=514–699
60% 62% Large bank
59% —
57% 54% N=437–852
49% 52%
50% — Finance company
N=226–281
38%
35% — Online lender
28% 29% N=235–519
27%
4%
2018 Survey 2019 Survey 2020 Survey 2021 Survey 2022 Survey*
* The survey methodology was revised in 2022 to enable more accurate identification of lender types than in prior
years. For 2022 net satisfaction by source, the difference between these estimates and those generated with the
prior years' methodology are not statistically significant at the 5% level. See Methodology for more details.
1 Percentages may not sum to 100 because of rounding.
2 See Notes and Definitions for details on lender descriptions used in the SBCS. Select lenders shown. See Appendix for more details.
3 Net satisfaction is the share of firms satisfied minus the share of firms dissatisfied. Finance company satisfaction data for 2018 are not available because it was
not included as a discrete answer choice. In the 2022 survey, details on firms’ experiences with lenders were collected only for the two most recent applications.
For comparison purposes, percentages shown here from the 2018, 2019, 2020, and 2021 surveys include only firms’ two most recent applications; therefore,
percentages may vary slightly from past reports.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 21
FINANCING APPLICATIONS
Challenges with Lenders
Applicants that sought financing at small banks reported fewer challenges
than applicants at other sources. Online lender applicants reported challenges
with high interest rates and unfavorable repayment terms.
SHARE OF APPLICANTS WITH CHALLENGES AT SOURCE, Select Lenders 1
(% of loan, line of credit, and cash advance applicants at source)
Small bank N=761 40%
Large bank N=1,298 50%
Finance company N=377 51%
Online lender N=757 61%
CHALLENGES WITH LENDERS, Select Lenders1,2 (% of loan, line of credit, and cash advance applicants at source)
Large bank N=1,298 Small bank N=761 Online lender N=757 Finance company N=377
43%
33% 34%
23% 23%
21%
19% 18% 18%
17% 16% 17% 16% 16%
12% 12% 12% 11%
9%
7%
Long wait for credit Difficult application High interest rate Lack of transparency Unfavorable repayment
decision or funding process terms
1 Select lenders shown. See Appendix for more details. See Notes and Definitions for details on lender descriptions used in the SBCS.
2 Respondents could select multiple options. Select response options shown. See Appendix for more details.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 22
DEMOGRAPHICS
The following charts provide an overview of the survey respondents.
CENSUS DIVISION 1 (% of employer firms) N=7,864
INDUSTRY 1,2 (% of employer firms) N=7,864
Professional services and
real estate 20%
Non-manufacturing goods 18%
production and associated services
Business support and 15%
consumer services
Retail 13%
Healthcare and education 13%
Leisure and hospitality 11%
Finance and insurance 6%
Manufacturing 4%
1 SBCS responses throughout the report are weighted using US Census data to represent the US small employer firm population on the following dimensions: firm
age, number of employees, industry, geography, race/ethnicity of owner, and gender of owner. For details on weighting, see Methodology. Percentages may not
sum to 100 because of rounding.
2 The non-manufacturing goods production and associated services category includes industries such as agriculture, construction, wholesale trade,
transportation, and warehousing. See Appendix for more details.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 23
DEMOGRAPHICS
(Continued)
AGE OF FIRM 1,2 (% of employer firms) N=7,864 GEOGRAPHIC LOCATION 1,3 (% of employer firms) N=7,864
30%
20%
15% 85% 15%
13%
12% Urban Rural
9%
0–2 3–5 6–10 11–15 16–20 21+
Years
REVENUE SIZE OF FIRM 1,2,4 (% of employer firms) N=7,694 NUMBER OF EMPLOYEES 1 (% of employer firms) N=7,864
52%
55%
24%
21%
18%
4% 13% 5%
9%
<$100K $100K–$1M $1M–$10M >$10M 1–4 5–9 10–19 20–49 50–499
Annual revenue Employees
1 SBCS responses throughout the report are weighted using census data to represent the US small employer firm population on the following dimensions: firm age,
number of employees, industry, geography, race/ethnicity of owner, and gender of owner. For details on weighting, see Methodology.
2 Percentages may not sum to 100 because of rounding.
3 Urban and rural definitions come from US Department of Agriculture Rural-Urban Commuting Area codes.
4 Revenue size categories have been condensed and simplified for readability. Actual categories are ≤$25K, $25,001–$50K, $50,001–$100K, $100,001–$250K,
$250,001–$500K, $500,001–$1M, $1,000,001–$5M, $5,000,001–$10M, and >$10M. See Appendix for more details.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 24
DEMOGRAPHICS
(Continued)
CREDIT RISK OF FIRM 1,2 (% of employer firms) N=5,879 AGE OF FIRM’S PRIMARY FINANCIAL N=7,494
DECISION MAKER 2 (% of employer firms)
High Under 35 5%
credit risk
6%
35–44 17%
45–54 25%
Medium
credit risk 55–64 32%
24% Low
credit risk
69% 65 or over 20%
GENDER OF OWNER(S) 3 (% of employer firms) N=7,864 RACE/ETHNICITY OF OWNER(S) 3 N=7,864
(% of employer firms)
<1% American Indian or
64% 6%
2% Alaskan Native
Men-owned Black or African
11%
American
81% Hispanic
22% Asian
Women-owned White
14%
Equally owned
22% of employer 15% of employer 9% of employer firms are
firms are at least firms are at least at least partially owned by
partially owned by partially owned by a member of the LGBTQ
an immigrant. a veteran. community.
1 See Notes and Definitions for details on credit risk definitions used in the SBCS.
2 Percentages may not sum to 100 because of rounding.
3 SBCS responses throughout the report are weighted using US Census data to represent the US small employer firm population on the following dimensions: firm
age, number of employees, industry, geography, race/ethnicity of owner, and gender of owner. For details on weighting, see Methodology.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 25
METHODOLOGY
DATA COLLECTION firm (1 to 499 employees) population in of small employer firm owners’ combined
the United States by number of employees, race and ethnicity matches the state-level
The SBCS uses a convenience sample age, industry, geographic location (census distribution of these characteristics among
of establishments. A diverse set of division and urban or rural location), owners of firms of all sizes. Given that
partner organizations that serve the small gender of owner(s), and race or ethnicity of small employer firms represent 99.7% of
business community contact businesses owner(s). businesses with paid employees, we expect
by email.¹ The Federal Reserve Banks also these assumptions align relatively closely
directly contact prior SBCS participants, with the true population.6
For this report and analysis, we first limit
and, in the past, have contacted other
the sample in each year to only employer
small businesses on publicly available
email lists.² The survey instrument is an
firms.³ We then post-stratify respondents by RACE/ETHNICITY AND GENDER
online questionnaire that typically takes
their firm characteristics. Using a statistical IMPUTATION
technique known as “raking,” we compare
6 to 12 minutes to complete, depending Not every respondent provided complete
the share of businesses in each category
on the intensity of a firm’s search for information on the gender, race, and/or
of each stratum (for example, within the
financing. The questionnaire uses question the ethnicity of their business’s owner(s).
industry stratum, the share of firms in the
branching and flows based on responses We need this information to correct for
sample that are manufacturers) to the share
to survey questions. For example, financing differences between the sample and the
of small businesses in the nation in that
applicants receive a different line of population data. To avoid losing these
category.4 As a result, underrepresented
questioning than nonapplicants. Therefore, observations, we use a series of statistical
firms are up weighted and overrepresented
the number of observations for each models to impute the missing data.
firms are down weighted. We iterate this
question varies by how many firms receive Generally, when the models predict a given
process several times for each stratum
and complete a particular question. characteristic with an accuracy of around
to derive a sample weight for each
respondent. This weighting methodology 80 percent in out-of-sample tests, we use
WEIGHTING was developed in collaboration with the the predicted values from the models
National Opinion Research Center (NORC) for the missing data.7 When the model’s
The sample for the SBCS is not selected at the University of Chicago. The data used predictive power is below that threshold,
randomly; thus, the SBCS may be subject to construct the weights originate from the those data are not imputed, and the
to biases that random sample surveys US Census Bureau.5 responses are dropped. After the models
would not be subject to. For example, impute the data, we compare descriptive
there are likely small employer firms not on statistics of key survey questions with and
our contact lists, a situation which could We are unable to obtain exact estimates of without imputed data to ensure robustness
lead to noncoverage bias. To control for the combined racial and ethnic ownership of estimates. In the final sample, eight
potential biases, we weight the sample data of small employer firms for each state or at percent of employer firm observations have
so the weighted distribution of firms in the the national level. To derive these figures, imputed values for the gender, race, or
SBCS matches the distribution of the small we assume that the state-level distribution ethnicity of a firm’s ownership.
1 For more information on partnerships, please visit www.fedsmallbusiness.org/partnership.
2 For past surveys, we directly approached businesses reported on System for Award Management (SAM) Entity Management Extracts Public Data Package;
Small Business Administration (SBA) Dynamic Small Business Search (DSBS); state-maintained lists of certified disadvantaged business enterprises (DBEs);
state and local government Procurement Vendor Lists, including minority- and women-owned business enterprises (MWBEs); state and local government-
maintained lists of small or disadvantaged small businesses; and a list of veteran-owned small businesses maintained by the Department of Veterans Affairs.
3 Weights for nonemployer firms are computed separately, and a separate report on nonemployer firms is generally issued annually.
4 Employee size strata are 1–4 employees, 5–9 employees, 10–19 employees, 20–49 employees, and 50–499 employees. Age strata are 0–2 years, 3–5 years,
6–10 years, 11–15 years, 16–20 years, and 21+ years. Industry strata are nonmanufacturing goods production and associated services, manufacturing, retail,
leisure and hospitality, finance and insurance, healthcare and education, professional services and real estate, and business support and consumer services.
Race/ethnicity strata are non-Hispanic white, non-Hispanic Black or African American, non-Hispanic Asian, non-Hispanic Native American, and Hispanic.
Gender strata are men-owned, equally owned, and women-owned. See Appendix for industry definitions, urban and rural definitions, and census divisions.
5 State- and MSA-level data on firm age come from the 2020 Business Dynamics Statistics. In contrast to prior years, we here use the firm age for all firms, not
just for firms with fewer than 500 employees, for each state and MSA. Unfortunately, data on firm age and size have not been available at the state or MSA level
since the 2014 Business Dynamics Statistics. At the national level, we find only very slight deviations between firm ages for all firms, as opposed to those for firms
with fewer than 500 employees. We derive industry, employee size, and geographic location data from the 2020 County Business Patterns. USDA Rural-Urban
Commuting Area codes are used to classify ZIP codes as urban or rural. Data on the race, ethnicity, and gender of business owners are derived from the 2020
Annual Business Survey.
6 US Census Bureau, County Business Patterns, 2020.
7 Out-of-sample tests are used to develop thresholds for imputing the missing information. To test each model’s performance, half of the sample of nonmissing
data is randomly assigned as the test group, while the other half is used to develop coefficients for the model. The actual data from the test group are then
compared with what the model predicts for the test group. On average, predicted probabilities that are associated with an accuracy of around 80 percent are
used, although this varies slightly, depending on the number of observations that are being imputed.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 26
METHODOLOGY
COMPARISONS TO PAST 2015 survey year are not displayed in this and other support. Small-business owners
REPORTS report, as they lack information on the also increasingly relied on funds from their
aforementioned variables. The data in this personal savings or from family and friends.
Because previous SBCS reports vary in report are, however, comparable to the
terms of the population scope, geographic report containing 2018 survey data that
Furthermore, pandemic-era interventions
coverage, and weighting methodology, was published in 2019, the 2019 survey
caused survey respondents to answer
some survey questions are not directly data that were published in 2020, the
questions about their financing needs
comparable across time. The employer 2020 survey data that were published in
and experiences differently. For example,
report using 2015 survey data covered 26 2021, and the 2021 survey data that were
some appear not readily able to distinguish
states and is weighted by firm age, number published in 2022.8 For more information
pandemic relief programs from more
of employees, and industry. The employer on the methodological changes to the
traditional forms of financing or formal
reports using 2016 and 2017 data included “time-consistent” weights, please refer to
financing applications from direct appeals
respondents from all 50 states and the the methodology section of the 2019 Report
for loans from personal contacts. These
District of Columbia. We weight these on Employer Firms.
considerations motivated adjustments
data by firm age, number of employees,
to the 2022 SBCS questionnaire to better
industry, and geographic location (both
In addition, many survey questions are not identify and track funding products and
census division and urban or rural location).
comparable over time because of changes sources. The key differences in the 2022
The 2017 survey weight also included
in the response options. For example, the questionnaire compared to prior years are
gender, race, and ethnicity of the business
option “Finance company” was added as an described below.9
owner(s), as described previously.
application source in the 2019 survey; thus,
the application rates by source displayed in
The most significant change was the
In addition, the categories used within each the 2023 report are not directly comparable
addition of a product table requiring a
weighting characteristic also differ across to reports prior to the 2019 survey.
“yes” or “no” response for each financing
survey years. For instance, there were
product. This approach represents a
three employee size categories in the 2015
survey and five employee size categories in
CHANGES TO FINANCING survey research best practice for collecting
the 2016 and 2017 surveys.
QUESTIONS IN THE 2022 SBCS information on a detailed set of response
options and replaced the following
The COVID-19 pandemic brought about questions from previous questionnaires:
Because of changes in the weighting substantial changes in funding needs and (1) an overarching question asking whether
methodology of over-time data, the time sources for small businesses. These shifts the firm applied for financing in the prior
series data in this report supersede and introduced new challenges for surveys 12 months, (2) a follow-up question about
are not comparable with the time series that capture information about small products sought, and (3) a previously
data (2015–2017 survey years) in the business funding, including the Small separate question about pandemic-related
Employer Firms Report published in May Business Credit Survey. In response to the financial assistance. The new table
2018. Compared to those previous reports, pandemic, new sources of funds became yielded an unexpectedly high application
the current weighting scheme makes available in the form of the $800 billion rate. Analysis of the text responses for
use of a greater number of variables (it Paycheck Protection Program (PPP), and the "other" forms of financing provided
includes the race, ethnicity, and gender the $390 billion Economic Injury Disaster additional context. In this text field,
of a business’s owner(s)) and is thus Loan (EIDL) program, as well as through respondents mentioned applications for
more representative of the US small the continued availability of public and grants, solicitation of donations, new draws
employer-firm population. Data for the private grant programs, loan programs, on existing credit lines, or the movement of
8 Because of adjustments to the weighting of the 2020 survey data after the publication of the 2021 report, percentages shown in the 2021 report related to 2020
survey data may differ from 2022 and 2023 report findings on 2020 survey data.
9 This section addresses the most material changes to questions and structure the 2022 questionnaire; other changes, such as the return of previously
asked questions, are not described. See the 2022 questionnaire for details on the phrasing and flow of questions. Past years’ questionnaires are available at
fedsmallbusiness.org.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 27
METHODOLOGY
funds from the owner's personal accounts months, with the option to enter zero if choice lender selection. The recoded text
to the business. These responses were they submitted none other than pandemic responses and multiple-choice responses
recoded out of the applicant branch of relief. Those entering zero—for example, an matched about 80 percent of the time. The
questions because they do not meet SBCS EIDL loan applicant that selected “yes” for most common mismatch was found with
parameters for applicant firms. Still, these both pandemic-related financial assistance bank lenders—specifically, respondents
responses provide important information and for a loan in the product table—were selected “small bank” in the multiple-choice
about the increasing complexity of small removed from this pool of applicants. This question though their bank met the criteria
business financing, and lessons from the validation step, combined with our intensive for large bank (more than $10 billion in
2022 responses will be applied to future data cleaning approach, provides a high deposits). Throughout this report, data on
questionnaires. degree of confidence in comparability for sources and lenders are presented using
this select set of applicant firms. the recoded responses.
While text responses for “other” products
could be reviewed and recoded, the Several relatively minor changes were made Because prior years’ questionnaires
standard selections in the new product within the application detail branch. For did not include the open-ended lender
table did not allow for the same level one, to reduce respondent burden, detailed question, we must rely on the multiple-
of review. As such, this report does not questions were asked only for the two most choice selection for sources at which firms
present findings for overall financing recent applications. Prior years’ surveys applied. This report includes notations
sought, overall financing received, and included questions about the third most for over-time comparisons indicating the
nonapplicant actions. The nonapplicant recent. For comparisons of 2022 estimates differences between the approach used
data are considered incomplete because with past survey years, only the responses to categorize sources more accurately
respondents that selected “other” financing associated with applicants’ two most in 2022 and the approach used for past
were routed past the nonapplicant questions. recent applications were considered. As a surveys. For partial credit approvals and net
result, the figures presented in this report satisfaction by source, the differences in
may vary slightly from prior years’ reports. percentages calculated using the multiple-
The report does include findings for
choice responses and those using the text
applicants seeking loans, lines of credit,
responses were not statistically significant
and cash advances. Though the changes Additionally, the 2022 questionnaire
at the 5% level.
outlined above affected this pool of included a new optional open-ended
applicants, the survey presents additional question asking respondents for the name
questions to these respondents (in the of the lender at which their business
“application detail branch”) which enabled applied. These responses provided
us to more readily identify and remove important insights on respondents’
responses for firms that did not apply for understanding of the lender categories
a loan, line of credit, or merchant cash used in the SBCS. Approximately 70
advance—as defined in the SBCS—in the percent of applicants provided a lender
prior 12 months. Additionally, respondents name in the open-ended question. We
in this branch were asked for the number recoded their text responses using
of loan, line of credit, or cash advance the SBCS lender categories and then
applications submitted in the prior 12 compared them to respondents’ multiple-
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 28
METHODOLOGY
CREDIBILITY INTERVALS AND
STATISTICAL TESTS
Credibility intervals are an important We list 95% credibility intervals for key
component of the analysis in this report. statistics in the following table. The
Where there are large differences in intervals shown apply to all employer firms
estimates between types of businesses or in the survey. More granular results with
survey years, we perform additional checks smaller observation counts will generally
on the data to determine whether such have larger credibility intervals.
differences are statistically significant.
The combination of the results of these
tests and several logistic regression
Credibility Intervals for Key Statistics in the 2023 Report on Employer Firms
models helped to guide our analysis and
decide on the variables to include in the Credibility Interval
Percent
report. To determine whether differences (Percent)
are statistically significant, we develop
credibility intervals using a balanced Share that applied for a loan, line of credit, or cash advance 40.3 +/- 2.0
half-sample approach.10 Because the
Share with outstanding debt 72.1 +/- 1.2
SBCS does not come from a probability-
based sample, the credibility intervals we Loan/line of credit and cash advance approval rate 79.2 +/- 2.9
develop should be interpreted as model-
based measures of deviation from the true Share of firms with revenue growth in prior 12 months 44.4 +/- 1.7
national population values.11
Share of firms in fair or poor condition 57.0 +/- 1.4
10 Wolter. Survey Weighting and the Calculating of Sampling Variance. 2007.
11 American Association for Public Opinion Research. Task Force on Non-probability Sampling. 2013.
SMALL BUSINESS CREDIT SURVEY | 2023 REPORT ON EMPLOYER FIRMS Source: Small Business Credit Survey, Federal Reserve Banks 29
File and source
- File
- wavering-2023-2023-report-on-employer-firms-findings-from-the-2022-small-business-credit-s.pdf
- Size
- 1,700,123 bytes
- SHA-256
- 74f50eeab92ae0f642a7c1f1460816daff16eba66fb79c796d64832894a6b5bf
- Our copy
- wavering-2023-2023-report-on-employer-firms-findings-from-the-2022-small-business-credit-s.pdf
- Original
- www.fedsmallbusiness.org