Report on Employer Firms: Findings from the 2024 Small Business Credit Survey (Federal Reserve Banks (Small Business Credit Survey))

Summary

• In the prior 12 months, 38% of small employer firms reported an increase in revenues, while 41% reported a decrease.p.7
• Fifty-nine percent of small employer firms sought new financing in the 12 months prior to the survey, with 40% of applicants seeking less than $50,000.p.4
• Among applicants for loans, lines of credit, or merchant cash advances, 52% were fully approved, 26% were partially approved, and 21% were denied.p.22
• The most common operational challenge cited by small employer firms was reaching customers and growing sales, reported by 57% of firms.p.9
• Rising costs of goods, services, and/or wages remained the top financial challenge, reported by 75% of employer firms in 2024.p.10
• The majority of small employer firms (59%) rent the facility used as their business headquarters, while 17% own the space and 17% operate out of a residence.p.31

Key insights

1. Net satisfaction among applicants approved for financing at online lenders dropped from 15% in 2023 to 2% in 2024.p.26
2. Firms denied financing were more likely in 2024 (41%) than in 2021 (22%) to cite having too much debt already as a reason for denial.p.16
3. Medium- and high-credit-risk firms were significantly more likely to apply for financing at online lenders (45%) than low-credit-risk firms (16%).p.20
4. Among firms experiencing financial challenges, 55% used personal funds and 51% used cash reserves to manage them.p.11
5. Liability insurance was the most common type of coverage carried by employer firms (91%), while cost was the most prevalent insurance challenge (70%).p.33
6. Thirty-four percent of small employer firms sought and received non-credit funding, primarily consisting of funds from the owner (24%).p.28