Federal Reserve Banks, Small Business Credit Survey: 2022 Report on Nonemployer Firms (2022)
Summary
Small Business Credit Survey 2022 Report on Nonemployer Firms from the Federal Reserve Banks, based on the 2021 survey, by Lucas Misera, Ann Marie Wiersch and Emily Wavering Corcoran of the Federal Reserve Bank of Cleveland. Nonemployer firms account for approximately four in five small businesses and $1.3 trillion in sales. Thirty-one percent of nonemployers in the 2021 survey reported an increase in revenue, compared to just 14% in the 2020 survey, though most reported financial challenges. Despite policymakers' 2021 changes to the Paycheck Protection Program aimed at the smallest businesses, just half of smaller nonemployer firms applied for PPP funding in 2020 or 2021. The key statistics table shows 26.2 percent applied for financing and 72.4 percent were in fair or poor financial condition.
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“Federal Reserve Banks, Small Business Credit Survey: 2022 Report on Nonemployer Firms (2022).”
Original at www.fedsmallbusiness.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/federal-reserve-banks-small-business-credit-survey-2022-report-on-none-06f92f5368/
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ISSN 2831-4034 | https://doi.org/10.55350/sbcs-20220929
SMALL BUSINESS
CREDIT SURVEY
2022 REPORT ON NONEMPLOYER FIRMS
F E DE R A L R E SE RV E BA N K S of
Atlanta • Boston • Chicago • Cleveland • Dallas • Kansas City • Minneapolis
NewSURVEY
SMALL BUSINESS CREDIT York •| Philadelphia • Richmond
2022 REPORT ON NONEMPLOYER • St. Louis • San Francisco
FIRMS 1
ACKNOWLEDGMENTS
REPORT TEAM1
Lucas Misera, Federal Reserve Bank of Cleveland
Ann Marie Wiersch, Federal Reserve Bank of Cleveland
Emily Wavering Corcoran, 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 Lucas Misera, policy analyst, at lucas.misera@clev.frb.org.
The Small Business Credit Survey (SBCS) 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 work with us to promote and distribute the survey.2
Special thanks to colleagues within the Federal Reserve System, especially the community affairs officers, for their ongoing support of
the SBCS.3 The 2021 SBCS was 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 Leilani Barnett, Federal Reserve Bank of San Francisco
Ayo Ellis, Federal Reserve Bank of Cleveland Alfred Breuer, Federal Reserve Bank of Dallas
Camilla Grigsby, Federal Reserve Bank of Cleveland Brian Clarke, Federal Reserve Bank of Boston
Grace Guynn, Federal Reserve Bank of Atlanta Emily Engel, Federal Reserve Bank of Chicago
Mary Hirt, Federal Reserve Bank of Atlanta Dell Gines, Federal Reserve Bank of Kansas City
Alexander Marré, Federal Reserve Bank of Cleveland Nicholas Haltom, Federal Reserve Bank of Richmond
Lucas Misera, Federal Reserve Bank of Cleveland Michou Kokodoko, Federal Reserve Bank of Minneapolis
Amber Sherman, Federal Reserve Bank of Cleveland Lisa Locke, Federal Reserve Bank of St. Louis
Maria Thompson, Federal Reserve Bank of Cleveland Drew Pack, Federal Reserve Bank of Cleveland
Ann Marie Wiersch, Federal Reserve Bank of Cleveland Emily Perlmeter, Federal Reserve Bank of Dallas
Alvaro Sánchez, Federal Reserve Bank of Philadelphia
SURVEY ADVISORS Janelle Williams, Federal Reserve Bank of Atlanta
Claire Kramer Mills, Federal Reserve Bank of New York
Mark Schweitzer, Federal Reserve Bank of Cleveland
The views expressed in this report are those of the authors and are 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 Mark Schweitzer of the Federal Reserve Bank of Cleveland. Thank you, Heather Ann,
Ellen Seguin, 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.
3 Joseph Firschein, Board of Governors of the Federal Reserve System; Karen Leone de Nie, Federal Reserve Bank of Atlanta; Prabal Chakrabarti, Federal Reserve
Bank of Boston; Jane Dokko, Federal Reserve Bank of Chicago; Emily Garr Pacetti, Federal Reserve Bank of Cleveland; Tara Payne, Federal Reserve Bank of
Dallas; Teesha Miller, Federal Reserve Bank of Kansas City; Alene Tchourumoff, Federal Reserve Bank of Minneapolis; David Erickson, Federal Reserve Bank of
New York; Theresa Singleton, Federal Reserve Bank of Philadelphia; Carrie Cook, Federal Reserve Bank of Richmond; Daniel Davis, Federal Reserve Bank of St.
Louis; and Bina Shrimali, Federal Reserve Bank of San Francisco.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS i
TABLE OF CONTENTS
i EXECUTIVE SUMMARY 10 DEBT AND FINANCING
10 Financial Services Providers
iii NOTES AND DEFINITIONS
11 Debt Outstanding
1 DEMOGRAPHICS 12 Financing Demand and Outcomes
1 Firm Owner Characteristics 13 Financing Needs and Outcomes
2 Firm Characteristics 14 Nonapplicants
3 PERFORMANCE AND CHALLENGES 15 FINANCING APPLICATIONS
3 Revenue Performance 15 Loan/Line of Credit/Cash Advance Sources
4 Revenue and Employment Expectations, Next 12 16 Loan/Line of Credit/Cash Advance Approval
Months
17 METHODOLOGY
5 Financial Condition and Challenges
6 PANDEMIC-RELATED FINANCIAL
ASSISTANCE
6 Funding Applications
7 Nonapplicants
8 PPP Applications and Outcomes
9 PPP Applications by Source
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS i
EXECUTIVE SUMMARY
INTRODUCTION effects of COVID-19. Earlier in 2021, Revenue performance improved between
policymakers made significant changes to the 2020 and 2021 surveys, though most
Nonemployer firms—that is, businesses the Paycheck Protection Program (PPP) to nonemployer firms noted experiencing
with no employees other than the owner(s) ensure that the smallest businesses could financial challenges.
of the business—are an important piece access the funds.3 Still, the SBCS found
of the US economy, accounting for that just half of smaller nonemployer firms Thirty-one percent of nonemployers in
approximately four in five small businesses applied for PPP funding in 2020 or 2021, the 2021 SBCS reported an increase in
and $1.3 trillion in sales.1 Yet, as and among those smaller nonemployer firms revenue, compared to just 14% in the
demonstrated in previous Small Business that applied in 2021, less than half received 2020 SBCS. Despite the improvement
Credit Survey (SBCS) reports, nonemployer the full amount they sought. Similarly, in revenue performance from 2020, a
firms are more likely to experience financial when smaller nonemployers applied for majority of nonemployers reported that
challenges and difficulties accessing traditional financing such as loans or lines revenues remain lower than in 2019.
financing than firms with employees of credit, they were around half as likely as
The share of nonemployer firms
(employer firms); these trends were only larger nonemployers to receive all that they
reporting some type of financial
exacerbated by the COVID-19 pandemic.2 needed. However, nonemployer firms of all
challenge grew from 81% in 2020 to
This publication uses 2021 SBCS data to sizes had challenges accessing financing,
88% in 2021. Financial challenges
explore the experiences of nonemployer as just 29% ultimately reported having their
include dealing with uneven cash flows,
firms and highlight findings around firm financing needs met.
paying operating expenses, accessing
performance and access to funding.
This report highlights SBCS data that show credit, and growing sales.
While revenue performance numbers that nonemployer firms largely have yet to
The recovery of smaller nonemployer
improved between the 2020 and 2021 recover from the effects of the pandemic,
firms’ revenues notably lagged that
surveys, evidence of persisting financial and that financing remains difficult for these
of larger nonemployer firms, or those
difficulties among nonemployers showed firms to access. Importantly, the data show
with more than $100,000 in annual
in the 2021 data. The share of nonemployer that those trends are particularly evident
revenues. Thirty-one percent of larger
firms reporting financial challenges among smaller nonemployer firms.
nonemployers reported that revenues
increased. Despite improvements in 2021
had increased relative to prepandemic
revenues versus 2020, well over half of
levels, compared to 19% of smaller
nonemployers reported that revenues at
the time of the 2021 survey were still lower
SURVEY FINDINGS nonemployers.
than in 2019. Findings indicate there were The 2021 SBCS yielded 6,834 responses While 37% of smaller nonemployer firms
notable gaps in revenue performance from a nationwide convenience sample reported they were in poor financial
between smaller nonemployer firms of nonemployer firms. This publication condition, that was the case for just
(that is, nonemployer firms with less summarizes data for firms that were 16% of larger nonemployer firms.
than $100,000 in annual revenues) and currently operating or temporarily closed
their larger-revenue counterparts; in fact, at the time of survey. Because the SBCS
smaller nonemployer firms were more than findings represent the experiences of those
twice as likely as larger nonemployers firms that were operating at the time of the
to report that they were in poor financial survey, the data do not reflect the collective
condition. experiences of all small firms throughout
the pandemic. Firms that recently closed
Many pandemic-related financial assistance
are not included in the sample for this
programs were available in 2021 to help
report.
small businesses cope with the financial
1 US Census Bureau, Nonemployer Statistics, 2019.
2 Small Business Credit Survey 2021 Report on Nonemployer Firms. https://www.fedsmallbusiness.org/survey/2021/report-on-nonemployer-firms.
3 US Small Business Administration, Biden Administration PPP Reform Fact Sheets, 2021. https://www.sba.gov/document/support-biden-administration-ppp-
reform-fact-sheets.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS i
EXECUTIVE SUMMARY
(Continued)
Despite their financial challenges, Smaller nonemployer firms were less ABOUT THE SURVEY
nonemployer firms were less likely than likely than both larger nonemployer firms
employer firms to seek pandemic-related and employer firms to apply for financing;
financial assistance in the 12 months prior they were also less likely to receive the The SBCS is an annual survey of firms
to the survey. financing they sought. with fewer than 500 employees. The
SBCS sample includes nonemployers,
Sixty-two percent of nonemployers Twenty-nine percent of larger which represent over 77% of all US
applied for pandemic-related financial nonemployer firms applied for financing establishments.5 Respondents are asked
assistance in the prior 12 months, 15 in the 12 months leading up to the to report information about their business
percentage points fewer than the share survey, slightly more than the 25% of performance, financing needs and choices,
of employer firms that applied. smaller nonemployers that applied.4 and borrowing experiences. Responses to
the SBCS provide insights on the dynamics
Twenty-eight percent of nonemployer Just 16% of smaller nonemployer firms behind lending trends and shed light on
firm owners reported collecting reported receiving all of the financing various segments of the small business
unemployment insurance. for which they applied. In comparison, population. The SBCS is not a random
29% of larger nonemployers received all sample; results should be analyzed with
Nonemployers were most likely to that they sought, nearly in line with the awareness of potential biases that are
apply to the Economic Injury Disaster share of employer firms that were fully associated with convenience samples.
Loan (EIDL) program (39%). Twenty- funded. For detailed information about the survey
eight percent of nonemployers sought
design and weighting methodology, please
loans through the Paycheck Protection Among firms that sought loans, lines of
consult the Methodology section.
Program (PPP). credit, or cash advances, nonemployer
firms were less likely than employer
Larger nonemployer firms were far more firms to apply at banks but more likely
likely than their smaller counterparts to apply at online lenders. At either
to receive all of the PPP funding for banks or online lenders, nonemployers
which they applied in 2021. While 64% were less likely than employer firms to
of larger nonemployer firms received have their credit applications approved.
all of the PPP funding they sought, that
was the case for just 46% of smaller
nonemployers.
Nonemployer firms that applied for a
PPP loan were less likely than employer
firms to apply through a bank but more
than twice as likely as employer firms to
apply at an online lender.
4 The share of firms that applied for financing in 2021 excludes firms that applied for only pandemic-related financial assistance, such as PPP.
5 US Census Bureau, CBP and NES Combined Report, 2019.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER 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, or how
conditions at that point in time compare to a prior reference period. 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:
Prior 12 Months. The 12 months prior to the fielding of the survey. For the 2021 SBCS, this is approximately September–November 2020
through September–November 2021.
At Time of Survey. September through November 2021.
Next 12 Months. The 12 months following the fielding of the survey. For the 2021 SBCS, this is approximately September–November 2021
through September–November 2022.
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. Examples vary between questions to convey the most relevant services and providers.1 The
financial services providers and lenders 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 application 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 provided to
respondents vary by question but include mortgage companies, equipment dealers, auto finance companies, investment funds, and
insurance companies.
Online lender/fintech company. Online lenders/fintech companies are nonbanks that operate online. Examples provided to respondents
vary by question but include OnDeck, Kabbage, CAN Capital, Paypal, and Square.
Credit union. Credit unions are nonprofit cooperatives where members can borrow money at competitive rates from pooled deposits.
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.
Financial services company. Financial services companies are nonbank providers of business financial services. Examples include
companies that provide payroll processing, merchant services, and accounting services.
Alternative financial source. Examples of alternative financial sources provided to respondents include payday lenders, check cashing
services, pawn shops, and money order/transmission services.
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 the SBCS questionnaire for more details.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS iii
DEMOGRAPHICS
Firm Owner Characteristics
Nonemployer firms are more likely than employer firms to be owned by people
of color and women.
RACE/ETHNICITY OF OWNER(S)1,2 GENDER OF OWNER(S)2
(% of nonemployer and employer firms) (% of nonemployer and employer firms)
10% 2%
21%
7% 6%
11%
Nonemployer Employer Nonemployer 42% Employer
firms 15% firms firms firms
N=6,834 N=10,914 N=6,834 N=10,914
67% 58%
83% 79%
sAsian sBlack sHispanic sWhite sWomen-owned sMen-owned or equally owned
DESCRIPTION OF PRIMARY OWNER’S WORK FOR THE BUSINESS (% of nonemployer firms) N=6,399
Business is owner's only job 67% 40% of nonemployer firms work
as independent contractors for
Owner has multiple jobs; other businesses or agencies
this is the main job 17%
17% of surveyed nonemployer
Owner has multiple jobs; firms perform gig work3
this is not the main job 15%
76% of nonemployer firms are
Owner does not regularly legally incorporated
1%
work at this business
1 Non-Hispanic Native American firms, not shown, account for less than 1 percent of nonemployer firms and less than 1 percent of employer firms.
2 SBCS responses throughout the report are weighted using Census Bureau data to represent the nonemployer firm population in the United States by age,
industry, geographic location, gender of owner(s), and race or ethnicity of owner(s). Employer firm responses are weighted using Census Bureau 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.
3 The SBCS questionnaire describes a gig as a single project or task for which a worker is hired, sometimes through a digital marketplace, to work on demand.
Examples include Uber driver, freelancer, etc.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS Source: 2021 Small Business Credit Survey, Federal Reserve Banks 1
DEMOGRAPHICS
Firm Characteristics
Nonemployer firms are significantly smaller than employer firms, as
measured by annual revenues, and are more likely to be in service industries.
REVENUE SIZE OF FIRM 1,2
(% of nonemployer and employer firms) > $10M
$1M–$10M
$100K–$1M
≤ $100K
<1% 4%
2%
For purposes of In this report, “smaller
20%
this report, “smaller 22% employer firms” are
nonemployer firms” defined as those with
are those with $100K $1M or less in annual
or less in annual revenues. “Larger
revenues. “Larger employer firms”
52%
nonemployer firms” 78%
are those with more
are those with more than $1M in annual
than $100K in annual revenues.
revenues.
22%
Nonemployer firms Employer firms
N=6,287 N=10,512
INDUSTRY 2,3
(% of nonemployer and employer firms)
Nonmanufacturing goods Healthcare Leisure &
production & associated & education hospitality Manufacturing
services
Professional services Business support & Finance &
& real estate consumer services Retail insurance
Nonemployer
firms 26% 22% 21% 11% 8% 7% 3% 1%
N=6,834
Employer
firms 20% 18% 15% 13% 13% 11% 6% 4%
N=10,914
1 Categories have been condensed and simplified for readability. Actual categories are ≤$25K, $25,001–$50K, $50,001–$100K, $100,001–$500K, $500,001–$1M,
$1,000,001–$5M, $5,000,001–$10M, >$10M.
2 SBCS responses throughout the report are weighted using Census Bureau data to represent the nonemployer firm population in the United States by age,
industry, geographic location, gender of owner(s), and race or ethnicity of owner(s). Employer firm responses are weighted using Census Bureau 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.
3 The nonmanufacturing goods production and associated services category includes industries such as agriculture, construction, wholesale trade,
transportation, and warehousing. Within this industry category, the share of nonemployer firms is higher than the share of employers for transportation and
wholesale businesses.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS Source: 2021 Small Business Credit Survey, Federal Reserve Banks 2
PERFORMANCE AND CHALLENGES
Revenue Performance
Compared to the 2020 survey, more nonemployer firms reported revenue
growth, though overall revenue performance remains below prepandemic
levels.
NONEMPLOYER FIRM REVENUE PERFORMANCE, Prior 12 Months1,2 Increased
(% of nonemployer firms)
No change
Decreased
42% 41% 43% 44%
31%
14%
31% 34% 33% 31% 12% 21%
26% 25% 24% 25%
47%
75%
2016 Survey 2017 Survey 2018 Survey 2019 Survey 2020 Survey 2021 Survey
N=5,225 N=5,380 N=5,622 N=3,849 N=4,520 N=6,821
REVENUE CHANGE SINCE 20192,3
(% of nonemployer and employer firms)
Smaller nonemployer firms 70% 11% 19%
N=3,474
Larger nonemployer firms 60% 10% 31%
N=732
Employer firms 63% 10% 27%
N=7,212
Decreased No change Increased
1 See Notes and Definitions for details on time period definitions used in the SBCS.
2 Percentages may not sum to 100 because of rounding.
3 Respondents from firms that were established in 2019 or earlier were asked to compare their revenue and employment levels at the time of the survey to the
same time in 2019.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS Source: 2021 Small Business Credit Survey, Federal Reserve Banks 3
PERFORMANCE AND CHALLENGES
Revenue and Employment Expectations, Next 12 Months
Revenue expectations among nonemployer firms improved year-over-year,
but firms were still less optimistic about revenue growth than in years prior
to the pandemic.
NONEMPLOYER FIRM REVENUE EXPECTATIONS INDEX, Next 12 Months1,2
(% of nonemployer firms)
63%
62%
59% 59%
49%
7%
2016 Survey 2017 Survey 2018 Survey 2019 Survey 2020 Survey 2021 Survey
N=5,225 N=5,445 N=5,691 N=3,854 N=4,515 N=6,806
PLANS TO ADD EMPLOYEES, Next 12 Months2
(% of nonemployer and employer firms)
Nonemployer firms
N=6,690
35% 35% of nonemployer
firms are potential
employers—that is, they
Employer firms plan to add employees
N=10,635 41%
in the next 12 months.
1 The index is the share reporting expected revenue growth minus the share reporting expected declines.
2 See Notes and Definitions for details on time period definitions used in the SBCS.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS Source: 2021 Small Business Credit Survey, Federal Reserve Banks 4
PERFORMANCE AND CHALLENGES
Financial Condition and Challenges
Among both nonemployer and employer firms, smaller-revenue firms were
more likely to report their businesses were in fair or poor financial condition
at the time of the survey.
FINANCIAL CONDITION, At Time of Survey1,2
(% of nonemployer and employer firms)
Smaller nonemployer firms 37% 40% 17% 4% 2%
N=5,075
Larger nonemployer firms 16% 37% 30% 11% 6%
N=1,208
Smaller employer firms 24% 41% 23% 8% 3%
N=7,689
Larger employer firms 8% 29% 32% 20% 12%
N=2,816
Poor Fair Good Very good Excellent
SHARE OF FIRMS WITH FINANCIAL CHALLENGES, Prior 12 Months2,3
(% of nonemployer firms)
88%
81%
69%
64%
62%
2017 Survey 2018 Survey 2019 Survey 2020 Survey 2021 Survey
N=5,511 N=5,764 N=3,986 N=4,511 N=6,791
1 Self-reported financial condition at time of survey. 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 For comparison, 85% of employer firms in the 2021 survey reported financial challenges, an increase of four percentage points since the 2020 survey.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS Source: 2021 Small Business Credit Survey, Federal Reserve Banks 5
PANDEMIC-RELATED FINANCIAL ASSISTANCE
Funding Applications
Overall, nonemployer firms were less likely than employer firms to have
sought pandemic-related financial assistance in the prior 12 months.
TYPES OF FINANCIAL ASSISTANCE SOUGHT, Prior 12 Months1,2
(% of nonemployer and employer firms)
Nonemployer firms Employer firms
N=6,756 N=10,760
48% 47%
39% 38%
33%
31%
28%
24% 23% 23%
7% 8%
4% 5%
EIDL loan PPP loan Grant from EIDL advance Grant from Loan from Did not seek
state/local nonprofit or state/local financial
government foundation government assistance
fund fund
PANDEMIC-RELATED FINANCIAL ASSISTANCE APPLICATIONS AND OUTCOMES, Prior 12 Months2,3
(% of nonemployer and employer firms)
Sought assistance and Did not seek any form of
were denied funding assistance and did not need funding
Sought assistance Did not seek
and received funding assistance but needed funding
Smaller nonemployer firms
58% 13% 20% 9%
N=5,012
Larger nonemployer firms
63% 8% 15% 14%
N=1,191
Employer firms 65% 12% 15% 8%
N=10,736
28% of nonemployer firm owners collected unemployment
insurance benefits in the prior 12 months.2, 4
1 The Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) are administered through the US Small Business Administration.
Select response options shown. See Appendix for more detail. Respondents could select multiple options.
2 See Notes and Definitions for details on time period definitions used in the SBCS.
3 Percentages may not sum to 100 because of rounding. In this chart, unemployment benefits are included with financial assistance.
4 The CARES Act gave states the option of extending unemployment compensation to independent contractors and other self-employed workers who are
ordinarily ineligible for unemployment benefits.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS Source: 2021 Small Business Credit Survey, Federal Reserve Banks 6
PANDEMIC-RELATED FINANCIAL ASSISTANCE
Nonapplicants
Among firms that did not apply for financial assistance, nonemployer firms
most often said the reason was that they did not think they would qualify.
Employer firms were more likely than nonemployer firms to say they chose
not to apply because they did not need the funding.
REASONS FIRMS DID NOT SEEK FINANCIAL ASSISTANCE, Prior 12 Months1
(% of nonemployer and employer firms that did not apply for assistance)
Nonemployer firms
51% N=1,848
Did not think business would qualify
44%
Employer firms
N=1,817
23%
Could not find a program
to fit business needs
18%
22%
Programs too confusing
or time consuming
19%
8%
Other reasons
7%
28%
Business did not need funding
36%
1 See Notes and Definitions for details on time period definitions used in the SBCS. Respondents could select multiple options.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS Source: 2021 Small Business Credit Survey, Federal Reserve Banks 7
PANDEMIC-RELATED FINANCIAL ASSISTANCE
PPP Applications and Outcomes
Overall, the share of firms that applied for PPP loans declined from 2020
to 2021. Nonemployers were less likely than employers to have sought
PPP loans.
PPP APPLICATIONS, 2020 and 20211
(% of nonemployer and employer firms)
Applied in 2020
90%
Applied in 2021
76%
Did not apply for PPP
56%
52% 50%
44%
37% 35% 37%
28%
17%
8%
Smaller nonemployer Larger nonemployer Smaller employer firms Larger employer firms
firms firms N=7,641 N=2,808
N=4,991 N=1,199
PPP FUNDING RECEIVED, AS A SHARE OF AMOUNT SOUGHT BY APPLICANTS, 20212
(% of nonemployer and employer PPP applicants)
Smaller nonemployer firms 46% 9% 19% 27%
N=1,603
Larger nonemployer firms 64% 11% 10% 15%
N=426
Smaller employer firms 64% 15% 10% 11%
N=1,362
Larger employer firms 80% 13% 4% 4%
N=4,079
All Most (51%–99%) Some (1%–50%) None
1 The Paycheck Protection Program (PPP) is administered by the US Small Business Administration (SBA). PPP loans were available from April through August
2020 and January through May 2021.
2 Percentages may not sum to 100 because of rounding.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS Source: 2021 Small Business Credit Survey, Federal Reserve Banks 8
PANDEMIC-RELATED FINANCIAL ASSISTANCE
PPP Applications by Source
Compared to employer firm PPP applicants, nonemployer firms that sought
PPP loans were less likely to apply at banks and more likely to apply at online
lenders.
PPP APPLICATIONS BY SOURCE, 20211,2
(% of nonemployer and employer PPP applicants)
Nonemployer firms
44% N=2,215
39% Employer firms
N=5,709
31% 30%
26%
11%
7% 5% 7% 5% 2%
4%
Large bank Small bank Online lender/ Credit union Finance company CDFI
fintech company
SHARE OF PPP APPLICANTS THAT APPLIED AT ONLINE LENDERS, 20212
(% of nonemployer and employer PPP applicants)
Smaller nonemployer firms 27%
N=1,672
Larger nonemployer firms 15%
N=441
Smaller employer firms 13%
N=4,187
Larger employer firms
N=1,379
4%
1 Respondents could select multiple options.
2 The Paycheck Protection Program (PPP) is administered by the US Small Business Administration (SBA). The SBCS lender categories differ somewhat from
lender classifications used by the SBA to report PPP lending volume by lender type. Of note, the SBA classifies banks that originated PPP loans in partnership
with fintech platforms as fintech lenders; the SBCS classifies them as banks.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS Source: 2021 Small Business Credit Survey, Federal Reserve Banks 9
DEBT AND FINANCING
Financial Services Providers
Nonemployer firms are less likely than employer firms to use banks for
financial services.
USE OF FINANCIAL SERVICES PROVIDERS 1
(% of nonemployer and employer firms)
Nonemployer firms
48% N=6,779
Large bank
56% Employer firms
N=10,865
34%
Small bank
47%
20%
Credit union
13%
11%
Online lender/
fintech company 10%
11%
Business financial
services company 27%
4%
Finance company
8%
2%
CDFI
2%
Business does not 6%
use financial services
2%
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 descriptions used in the SBCS. Respondents could select multiple options. Select response options
shown. See Appendix for more details.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS Source: 2021 Small Business Credit Survey, Federal Reserve Banks 10
DEBT AND FINANCING
Debt Outstanding
Among nonemployer and employer firms, the share of firms with outstanding
debt remains elevated compared to prepandemic survey periods.
SHARE OF FIRMS WITH DEBT OUTSTANDING, At Time of Survey1,2
(% of nonemployer and employer firms)
Nonemployer firms Employer firms
80%
74%
71% 70% 71%
68%
59%
57%
51% 51%
45% 46%
2016 Survey 2017 Survey 2018 Survey 2019 Survey 2020 Survey 2021 Survey
N=5,298–9,802 N=5,474–8,081 N=5,769–6,540 N=3,962–5,101 N=4,445–9,530 N=6,664–10,679
AMOUNT OF DEBT, At Time of Survey2,3
(% of nonemployer and employer firms)
Nonemployer firms 43% 47% 10%
N=6,664
Employer firms 26% 34% 40%
N=10,679
sNo debt outstanding s≤$100K s>$100K
1 Respondents were instructed to exclude loans they expected would be forgiven from their outstanding debt (for example, PPP loans).
2 See Notes and Definitions for details on time period definitions used in the SBCS.
3 Categories have been simplified for readability. Actual categories are ≤$25K, $25,001–$50K, $50,001–$100K, $100,001–$250K, $250,001–$1M, and >$1M.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS Source: 2021 Small Business Credit Survey, Federal Reserve Banks 11
DEBT AND FINANCING
Financing Demand and Outcomes
Nonemployer firms were less likely than employer firms to have sought
financing in the prior 12 months.
SHARE THAT APPLED FOR FINANCING, Prior 12 Months1,2
(% of nonemployer and employer firms)
25% 29% 34%
Smaller nonemployer firms Larger nonemployer firms Employer firms
N=4,932 N=1,175 N=10,578
Among potential employers—that is, nonemployer firms expecting
to add employees—34% applied for financing in the prior
12 months. 59% of potential employers that applied said
they were seeking financing to expand their businesses.
TOTAL FINANCING RECEIVED 2,3
(% of nonemployer and employer applicant firms)
Smaller nonemployer firms 16% 10% 23% 52%
N=1,322
Larger nonemployer firms 29% 12% 23% 36%
N=342
Employer firms 31% 14% 20% 35%
N=3,602
All Most (51%–99%) Some (1%–50%) None
1 See Notes and Definitions for details on time period definitions used in the SBCS.
2 Excludes pandemic-related financial assistance applications.
3 Percentages may not sum to 100 because of rounding.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS Source: 2021 Small Business Credit Survey, Federal Reserve Banks 12
DEBT AND FINANCING
Financing Needs and Outcomes
FUNDING NEEDS AND OUTCOMES 1 N=6,638
(% of nonemployer firms)
To gauge funding success and shortfalls, we combine applicants’ financing outcomes and nonapplicants’ reasons for not applying.
Firms that had their funding needs met include
1) Applicant firms that received the full amount of financing sought
2) Nonapplicant firms that did not apply for financing because they already had sufficient financing
Firms that did not have their funding needs met include
1) Applicant firms that did not obtain the full amount of financing sought
2) Nonapplicant firms that needed funds but chose not to apply
When applicant firms did not obtain the full amount of financing sought, we consider them to have a funding shortfall. When nonapplicant
firms needed funds but chose not to apply, we consider them to have unmet funding needs.
26% 74%
Applied for financing Did not apply for financing
13% 6% 2% 5% 24% 23% 17% 11%
Received Received Received Received all Sufficient Debt averse Discouraged Other
none some most financing
21% 29% 50%
Had a financing Financing Have unmet
shortfall needs met funding needs
1 Excludes pandemic-related financial assistance applications. Discouraged firms are those that did not apply for financing because they believed they would
be turned down. Percentages may not sum to 100 because of rounding. For comparison, among employer firms, 24% had a financing shortfall, 42% had their
financing needs met, and 35% had unmet funding needs.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS Source: 2021 Small Business Credit Survey, Federal Reserve Banks 13
DEBT AND FINANCING
Nonapplicants
Among nonapplicants—that is, firms that did not apply for financing—
nonemployer firms were less likely than employer firms to say their business
had sufficient funding.
PRIMARY REASONS FIRMS DID NOT APPLY FOR FINANCING 1,2
(% of nonemployer and employer nonapplicant firms)
46%
Nonemployer firms Employer firms
N=4,582 N=6,538
32%
30%
26%
23%
14% 15%
13%
Had sufficient funding Debt averse Discouraged Other
REASONS DISCOURAGED NONAPPLICANTS DID NOT EXPECT TO BE APPROVED 2,3 N=1,040
(% of discouraged nonemployer nonapplicant firms)
Weak business financials 56%
Lender requirements too strict 26%
Lenders do not approve financing
for businesses like mine 26%
Was denied financing previously 17%
Missing documentation 6%
1 Response option “other” includes “credit cost was too high,” “application process was too difficult or confusing,” and “other.” See Appendix for more details.
Percentages may not sum to 100 because of rounding.
2 Discouraged firms are those that did not apply for financing because they believed they would be turned down.
3 Respondents could select multiple options. Response option “other” not shown. See Appendix for more details.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS Source: 2021 Small Business Credit Survey, Federal Reserve Banks 14
FINANCING APPLICATIONS
Loan/Line of Credit/Cash Advance Sources
Among firms that applied for loans, lines of credit, or cash advances,
nonemployer firms were less likely that employer firms to apply at banks and
more likely to apply at online lenders.
CREDIT SOURCES APPLIED TO 1
(% of nonemployer and employer firm loan, line of credit, and cash advance applicants)
Nonemployer firms
38% N=1,151
Large bank
Employer firms
43% N=2,607
33%
Online lender
23%
27%
Small bank
36%
16%
Finance company
17%
13%
Credit union
8%
4%
CDFI
3%
1 Excludes pandemic-related financial assistance applications. See Notes and Definitions for details on lender descriptions used in the SBCS. Respondents could
select multiple options. Response option “other” not shown in chart. See Appendix for more details.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS Source: 2021 Small Business Credit Survey, Federal Reserve Banks 15
FINANCING APPLICATIONS
Loan/Line of Credit/Cash Advance Approval
Across nonemployer and employer firm applicants, approval rates have
declined since prepandemic times. In the 2021 survey, applicants were most
likely to be approved at small banks.
SHARE OF LOAN, LINE OF CREDIT, AND CASH ADVANCE APPLICANT FIRMS THAT WERE FULLY
APPROVED, By Year1 (% of loan, line of credit, and cash advance applicants)
2019 Survey 2021 Survey
64%
58%
47% 48%
39%
31%
Smaller nonemployer firms Larger nonemployer firms Employer firms
N=512–743 N=228–241 N=1,837–2,454
SHARE OF LOAN, LINE OF CREDIT, CASH ADVANCE APPLICANTS THAT WERE AT LEAST PARTIALLY
APPROVED, By Source, 2021 Survey1,2 (% of loan, line of credit, and cash advance applicants at source)
Nonemployer firms Employer firms
66% N=284–413 N=534–1,077
58%
52%
47%
36% 35%
Small bank Online lender Large bank
1 Excludes pandemic-related financial assistance applications.
2 Select lenders shown. See Appendix for more details. See Notes and Definitions for details on lender descriptions used in the SBCS.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS Source: 2021 Small Business Credit Survey, Federal Reserve Banks 16
METHODOLOGY
DATA COLLECTION within the industry stratum, the share of COMPARISONS TO PAST
firms in the sample that are manufacturers) REPORTS
The SBCS uses a convenience sample to the share of nonemployer businesses
of establishments. A diverse set of in the nation that are in that category.3 As Because previous SBCS reports have
organizations that serve the small business a result, underrepresented firms are up varied in terms of the population scope,
community contact small firm respondents weighted, and overrepresented businesses geographic coverage, and weighting
by email.1 The survey instrument is an online are down weighted. We iterate this process methodology, the survey reports are
questionnaire that typically takes 6 to 12 several times for each stratum to derive a not directly comparable across time.
minutes to complete, depending on the sample weight for each respondent. This Geographic coverage and weighting
intensity of a firm’s search for financing. weighting methodology was developed in strategies have varied from year to year.
The questionnaire uses question branching collaboration with the National Opinion For example, the 2016 data were not
and flows based on responses to survey Research Center (NORC) at the University originally weighted by race, ethnicity,
questions. For example, financing applicants of Chicago. The data used for weighting or gender of owner(s), whereas the
receive a different line of questioning than come from data collected by the US Census 2017 through 2021 data (presented in
nonapplicants. Therefore, the number of Bureau.4 this report) did include these owner
responses for each question varies by demographics in the weighting scheme, as
how many firms receive and complete a described previously. In addition to being
particular question. weighted by different firm characteristics
RACE/ETHNICITY AND GENDER
over time, the categories used within each
IMPUTATION
characteristic have also differed across
WEIGHTING Not every respondent provided complete survey years. After implementing changes
information on the gender, race, and/or to the weighting methodology, post-2015
A sample for the SBCS is not selected the ethnicity of their business’s owner(s). survey years have been weighted with a
randomly; thus, the SBCS may be subject We need this information to correct for uniform set of variables. Data for the 2015
to biases not present with surveys that do differences between the sample and survey year are thus not displayed in this
select firms randomly. For example, there the population data. To avoid losing report, as they lack information on several
are likely firms not on our contact lists, these observations, we use a series of of the weighting variables. The data in this
and this may lead to a noncoverage bias. statistical models to impute the missing report are, however, comparable to the
To control for potential biases, the sample data. Generally, when the models predict report containing 2018 survey data that
data are weighted so that the weighted with an accuracy of around 80 percent in was published in 2019 and 2017 survey
distribution of firms in the SBCS matches out-of-sample tests, we use the predicted data that were published in 2018. For more
the distribution of the nonemployer firm values from the models for the missing information on the methodological changes
population in the United States by age, data.5 When the model outcomes are less to the “time-consistent” weights, please
industry, geographic location (urban or certain, those data are not imputed, and the refer to the methodology section of the
rural location), gender of owner(s), and race responses are dropped. After the models Small Business Credit Survey 2019 Report
or ethnicity of owner(s). We first limit the impute the data, we compare descriptive on Employer Firms. In addition, many survey
sample in each year to only nonemployer statistics of key survey questions with and questions are not comparable over time
firms.2 We then post-stratify respondents without imputed data to ensure stability of due to changes in the response options.
by their firm characteristics. Using a estimates. In the final sample, five percent
statistical technique known as “raking,” we of nonemployer firm observations have
compare the share of businesses in each imputed values for the gender, race, or
category of each stratum (for example, ethnicity of a firm’s ownership.
1 For more information on partnerships, please visit www.fedsmallbusiness.org/partnership.
2 Weights for employer firms are computed separately, and a separate report on employer firms is issued annually.
3 Age strata are 0–2 years, 3–4 years, 5–12 years, and 13+ 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 Hispanic, non-Hispanic Asian, non-Hispanic Black or African American, non-Hispanic Native American, and non-Hispanic white. Gender
strata are men-owned or equally owned, and women-owned. See Appendix for industry definitions and urban and rural definitions.
4 Data on industry and urban/rural location come from the US Census Bureau’s 2018 Nonemployer Statistics (NES). Data from the US Department of Agriculture’s
Rural-Urban Continuum Codes are used to classify a business’s county as urban or rural. Data on firm age come from the US Census Bureau’s 2012 Survey of
Business Owners. Data on the race, ethnicity, and gender of business owners are derived from the US Census Bureau’s 2017 NES-D release.
5 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% are used,
although this varies slightly, depending on the number of observations that are being imputed.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS 17
METHODOLOGY
(Continued)
For example, the option “Finance company”
Credibility Intervals for Key Statistics in the 2022 Report on Nonemployer Firms
was added as an application source in the
2019 survey; thus, the application rates by Percent Credibility Interval
source displayed in the 2022 report are not (Percent)
directly comparable to reports prior to the
Share that applied 26.2 +/- 1.3
2019 survey.
Share that received all financing sought 19.6 +/- 3.7
CREDIBILITY INTERVALS
Loan/line of credit and cash advance approval rate 54.4 +/- 3.1
The analysis in this report is aided by
the use of credibility intervals. Where Share of firms with financial challenges in prior 12 months 88.4 +/- 0.6
there are large differences in estimates
between types of businesses, we perform
Share of firms in fair or poor financial condition 72.4 +/- 0.8
additional checks on the data to determine
whether such differences are statistically TabTable 1
significant. The results of these tests
help guide our analysis and help us
decide what ultimately is included in the
report. To determine whether differences
are statistically significant, we develop
credibility intervals using a balanced half-
sample approach.6 Because the SBCS does
not come from a probability-based sample,
the credibility intervals we develop should
be interpreted as model-based measures of
deviation from the true national population
values.7 We list 95 percent credibility
intervals for key statistics in the following
table. The intervals shown apply to all
nonemployer firms in the survey. More
granular results with smaller observation
counts will generally have larger credibility
intervals.
6 Wolter. Survey Weighting and the Calculating of Sampling Variance. 2007.
7 American Association for Public Opinion Research. Task Force on Non-probability Sampling. 2013.
SMALL BUSINESS CREDIT SURVEY | 2022 REPORT ON NONEMPLOYER FIRMS 18
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