Survey Finds Small Banks are Lender of Choice for Small Businesses
This month, the Federal Reserve Banks released the 2015 “Small Business Credit Survey: Report on Employer Firms,” an annual survey of small businesses designed to provide insight into lending trends and track the needs of the small-business credit market. Key findings in this year’s survey include:
- Small banks are the lender of choice – Banks and lenders are the dominant advisory and credit channel. Firms that applied to small banks were the most successful and most satisfied with their borrowing experience. Small banks extended at least some of the financing requested to 76 percent of applicants. Large banks approved just 58 percent of applicants.
- Half of applicants received all the credit sought – 47 percent of respondents reported they had applied for financing in the past 12 months prior to the survey. Of these, 50 percent were approved for the full amount requested.
- Cash flow was the top business challenge for small firms – Almost 22 percent of small businesses reported cash flow as their top challenge (beating out even government regs and taxes).
- Online lenders are a common source of financing, but satisfaction levels are lowest – Overall, 20 percent of employer firms applied with an online lender. Among credit sources, online lenders had the second highest rate of approval at 71 percent, though approved firms were generally not very satisfied with their experience. In particular, these firms cited concerns with interest rates and unfavorable repayment terms.
As a small business itself, GRB understands these challenges and provides deposit and credit solutions to help the next generation of businesses in the Rochester community grow and succeed. Call us and find out how GRB can help!
Hats off to the Federal Reserve for understanding the importance of the small business community. This survey is an important benchmark for lenders and business owners alike. See the rest of the Federal Reserve survey data. There’s even a great video from the Federal Reserve’s survey director, Claire Kramer Mills.