For immediate release

Contact: Joey Lee, Media Relations, 215-574-3840

The 12 Federal Reserve Banks today issued the Small Business Credit Survey: 2019 Report on Employer Firms, which examines the results of an annual survey of small business owners nationwide. The report focuses on small employer firms, businesses that have between one and 499 full- or part-time payroll employees (hereafter “firms”). It is the latest addition to the Reserve Banks’ hub for small business research and analysis,

Fielded in the third and fourth quarters of 2018, the report showed that while revenue and employment growth both improved year over year, profitability remained the same. The outlook for 2019 is more tempered. While credit demand increased marginally in 2018, the number of firms receiving credit remained essentially flat. Firms with high credit risk and startups continued to have financing shortfalls. Online lenders in particular saw applications increase by approximately one-third, even though applicants were more dissatisfied with the interest rates offered.

Key findings can be found in the 2019 Report on Employer Firms executive summary. These findings include:

Performance and Expectations

  • The share of firms reporting revenue and employment growth increased from 2017, but the share of firms operating at a profit remained flat.
  • More than one-third of small firms (37 percent) reported adding payroll employees in 2018.
  • Employment gains were strongest at startups, firms with five or more employees, firms with more than $1 million in annual revenues, and firms with younger decision makers (56 years of age or younger).
  • A majority (73 percent) of firms saw input costs increase from 2017.
  • Expectations for 2019 are mixed, with a majority of firms expecting revenues to increase but the net share of firms expecting payroll job growth to decline.

Financial Challenges and Reliance on Personal Finances

  • Nearly two-thirds of firms (64 percent) continued to experience financial challenges, including difficulties with managing operating expenses, scarcity of credit, and challenges making debt payments.
  • Two-thirds (66 percent) of these firms relied on personal finances to cover their costs, while 40 percent of firms took out additional debt.

Financing Demand, Approvals, and Sources

  • Respondents showed consistent year-over-year demand for new financing, with 43 percent of firms applying for new capital in 2018, similar to 40 percent in 2017.
  • Nearly half of applicants (47 percent) received funding for the full amount they requested, similar to the 2017 survey.
  • Financing shortfalls were particularly pronounced among firms with weak credit profiles, unprofitable firms, younger firms, and firms in urban areas.
  • Applications to online lenders1 continued their growth trend in 2018, with 32 percent of firms applying to such lenders in 2018, up from 24 percent in 2017 and 19 percent in 2016. Borrowers chose online lenders mainly because of their speed to decision, the possibility of funding, and, to a lesser extent, the lack of need for collateral.
  • More often, however, applicants went to lenders with whom they had existing relationships.

Additional analysis of the 2018 Small Business Credit Survey will be released throughout 2019 at The analysis will take an in-depth look into specific types of small businesses, including nonemployer firms, minority-owned firms, and firms operating in low- and moderate-income communities.

Takeaways Specific to Philadelphia Fed’s Third District (eastern Pennsylvania, southern New Jersey, and Delaware)

Third District

  • Size of Workforce: Over half of firms in the Third District and in the nation employ fewer than five workers: 54 percent of Third District firms employ 1–4 employees, and 55 percent of U.S. firms employ 1–4 employees.
  • Firm Ownership: Compared with national averages, a higher percentage of Third District firms are owned by men (70 percent versus 65 percent) or are located in urban areas (91 percent versus 83 percent).
  • Financial Challenges: A larger share of Third District firms (36 percent) reported credit availability as a financial challenge in the previous 12 months than did U.S. firms (31 percent).
  • Demand for Financing: A majority of Third District firms (52 percent) applied for financing in the past 12 months, which considerably exceeds the share of U.S. firms (43 percent).
  • Primary Financing Used: Loans or lines of credit were the largest share (62 percent) of external financing regularly used by Third District firms, versus 55 percent of U.S. firms.


  • Size of Workforce: Over half of firms in Pennsylvania and in the nation employ fewer than five workers: 51 percent of Pennsylvania firms employ 1–4 employees, and 55 percent of U.S. firms employ 1–4 employees.
  • Firm Ownership: Compared with national averages, a higher percentage of Pennsylvania firms are owned by men (71 percent versus 65 percent), are owned by nonminorities (89 percent versus 81 percent), or are located in urban areas (86 percent versus 83 percent).
  • Financial Challenges: Twenty-two percent of Pennsylvania firms reported purchasing inventory or supplies to fulfill contracts as a financial challenge they encountered in the previous 12 months, compared with 17 percent of U.S. firms.
  • Factors Influencing Nonapplicants: A larger share of Pennsylvania firms that did not apply for financing (79 percent) cited an existing relationship with a lender as a factor influencing where they sought loans, lines of credit, or cash advances, compared with U.S. firms (60 percent).

About the Small Business Credit Survey (SBCS)

The SBCS collects information about business performance, financing needs and choices and borrowing experiences of firms with fewer than 500 employees. Responses to the SBCS provide insight into the dynamics behind aggregate lending trends and about noteworthy segments of small businesses. The results are weighted to reflect the full population of small businesses in the United States. The SBCS is not a random sample; therefore, results should be analyzed with awareness of potential methodological biases.

The SBCS includes experiences from firms across all 50 states and the District of Columbia through the joint efforts of the Federal Reserve Banks of New York, Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City, Minneapolis, Philadelphia, Richmond, San Francisco and St. Louis. The 2018 SBCS collected 12,455 responses in total, 6,614 of which were from employer firms.

[1]The survey questionnaire asks about a range of nonbank online providers, including retail/payments processors, peer-to-peer lenders, merchant cash advance lenders, and direct lenders. For purposes of topline findings, nonbank online lenders are grouped into one category, “online lenders.”