Small Firm Borrowing in Seventh District States: Results from the 2024 Small Business Credit Survey (Federal Reserve Bank of Chicago)

Summary

• The Small Business Credit Survey is fielded annually by the 12 Federal Reserve Banks and covers small businesses, defined as firms with fewer than 500 employees.p.1
• Among applicants in the 2024 survey, about 40% from Seventh District states and 48% from the U.S. as a whole did not receive the full amount of requested financing.p.2
• In 2020 and 2021, more than half of credit applicants did not receive the full amount of financing requested.p.2
• Businesses in Seventh District states applied to small banks about 42% of the time and to large banks about 29% of the time.p.4
• In 2024, 40% of small businesses in Seventh District states sought funding outside formal credit channels, and 44% of formal credit applicants also applied for these other types of funding.p.5
• If credit cards, trade credit, leases and factoring are included, about 60% of the national sample applied for a credit product in 2024.p.6

Key insights

1. Most small business respondents from Seventh District states and the nation sought no or low amounts of financing.p.1
2. Many respondents who did not receive full financing said they did not meet the credit qualifications of their lenders.p.2
3. Approval rates tended to be higher for credit products that small businesses were less likely to apply for, such as mortgages and home equity loans.p.3
4. Almost a quarter of national credit applicants sought financing from online lenders, and these applicants were more likely to self-report as medium or high credit risk.p.4
5. Small banks are defined as banks with less than $10 billion in total assets and large banks as banks with at least $10 billion.p.6
6. The Seventh District comprises Illinois, Indiana, Iowa, Michigan and Wisconsin.p.2