- Most small businesses continued to rely heavily on bank financing. Some 68 percent of respondents listed at least one credit product in their top three sources of financing, such as credit cards and commercial bank loans, after business earnings;
- Overall, more respondents increased their use of credit products. Results show 12 percent of respondents added bank financing to their top three financing sources, while 7 percent dropped all bank products from their top three;
- Credit card reliance broadly increased for respondents of all age groups, except for the youngest firms (0-5 years), which relied more heavily on business earnings or loans from friends and family;
- Reliance on commercial bank loans declined among respondents of all age groups, except for the oldest firms (greater than 21 years), which continued to rely on commercial bank loans as their primary credit source.
The analysis presents additional new data from 426 regional small businesses (New York, New Jersey, Connecticut and Pennsylvania) on their financial well-being, credit needs and recent borrowing experiences.
"Small businesses play a critical role in creating new jobs and are of vital importance to the economic recovery. The Bank's research on small businesses’ use of and access to credit is intended to inform a variety of community stakeholders," said Kausar Hamdani, senior vice president and Community Affairs Officer at the New York Fed.
The New York Fed also announced that it will continue to conduct a poll of small business financing and credit across the region on a quarterly basis as part of its ongoing efforts to learn more about the dynamics of small business financing. Poll questions will focus on firm finances, credit needs and outcomes, and will often feature special topics. The poll currently in the field (through April 29, 2011) asks respondents about credit cards—their reliance on credit card financing, credit card debt and recent changes in business credit card terms. Results will be released early in the quarter on the New York Fed’s website.
About the New York Fed’s Quarterly Small Business Borrowers Poll
The New York Fed’s Quarterly Small Business Borrowers Poll aims to gather information about small businesses across the Federal Reserve’s Second District (New York, New Jersey and Connecticut). Approximately 500-700 respondents are asked questions about the broad financial well-being and credit needs of their business, including recent borrowing experiences. First established in August 2010 as a pilot poll, responses are collected through online surveys with the assistance of public and nonprofit partners. Analysis is released within the first few weeks of each quarter.