2020 Report on Employer Firms

cover image for this reportSmall Business Credit Survey: 2020 Report on Employer Firms

Federal Reserve Banks

First published April 2020

The publication of this report comes at a particularly challenging time for our nation’s small business sector. Small businesses across the country are grappling with the profound impact of the COVID-19 pandemic on their operations and on their owners’ and employees’ livelihoods. As policymakers and service providers begin to enact programs to help firms weather the economic challenges, insights about the financial position of small businesses can provide a useful perspective on how best to target funds and services. The Federal Reserve Banks’ Small Business Credit Survey (SBCS), fielded in Q3 and Q4 of 2019, offers baseline data on the financing and credit positions of small firms before the onset of the crisis. The survey findings provide insights into firms’ preparedness to withstand the shock, their existing debt levels, and the actions they may take in response to an unexpected loss of revenues.

Understanding that the potential effects of COVID-19 are substantial and will vary by type of business, accompanying this report is a separate analysis that explores small business resiliency. This supplemental brief, Can Small Firms Weather the Economic Effects of COVID-19?, is published concurrently with this report. A subsequent report will provide results from nonemployer firms.

The results of the survey raise several important considerations in the current environment: most firms are ill-prepared for a sustained period of revenue loss; firms’ reliance on personal funds could mean severe repercussions for those individuals and households in the event of failure; and many small businesses do not rely on traditional banks for credit, and, therefore, any program designed to support them should take that into consideration.

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