It’s no surprise that small businesses have a big impact on the U.S. economy. According to the SBA, there are over 30 million small businesses in the U.S. that accounted for 1.9 million net new jobs in 2018. For a look at small businesses’ profitability and their success when applying for financing, 12 regional Federal Reserve Banks collaborated on the Small Business Credit Survey, released in April 2019.
Small Business Credit Survey
The survey, conducted in Q3 and Q4 of 2018, received 6,614 responses from small employer firms with 1–499 full- or part-time employees, in the 50 states and the District of Columbia.
The good news:
- More than half of employer firms surveyed reported that they were profitable in 2018 and had seen increased revenues throughout the year.
- Forty-three percent of companies surveyed said they had applied for financing in the last 12 months, and of those, nearly half (47 percent) received the full value of what they sought.
- More than 7 in 10 said they expect revenue to grow in 2019
- 44% expect to add more jobs.
The not-so-good news:
- Only about half of the businesses that did not apply for financing said they had sufficient financing.
- Large financing gaps were felt among businesses with weak credit profiles and unprofitable businesses.
- Bank applicants were most dissatisfied with wait times for credit decisions.
- Online lender applicants were most dissatisfied with high interest rates.
- Funding gaps were most acute for firms seeking $100-$250K.
How SmartBiz Helps Small Business Owners
SmartBiz Loans is particularly interested in this survey as our passion is helping small business owners reach their dreams with affordable financing. SmartBiz Loans facilitates SBA loans and bank term loans through a marketplace of lenders. We know that the right small business loan at the right time can help strengthen a business and fuel expansion.
An infusion of funds from an SBA or bank term loan can be used for working capital or to pay off existing high-interest debt. A low-cost SBA loan can even be used for a commercial real estate purchase or refinance.
SmartBiz Helps Small Business Owners Get Loan Ready
Another way SmartBiz Loans supports small business owners is by helping them get their financial profile ready for the loan application process.
Just like a CFO in a large business, SmartBiz Advisor—our intelligent online tool—can help business owners learn how to build their business lending profile by educating them about factors that banks consider. After all, a business is more than just a credit score.
SmartBiz Advisor helps business owners learn where they stand for each of key areas banks use to evaluate your business, such as: debt coverage, debt usage, credit and business revenue trends.
Sign up for free here.
Not sure if getting a loan is the right choice to fuel growth? Check out this blog post to learn how funds can fuel expansion: The Benefits of Long-Term Debt for Your Small Business.