Federal Reserve Banks
First published March 2023
The Small Business Credit Survey (SBCS), a collaboration of all 12 Federal Reserve Banks, provides timely information about small business conditions to policymakers, service providers, and lenders. In 2022, the survey reached nearly 8,000 employer small businesses, collecting information about the performance, challenges, and credit-seeking experiences of firms across the United States.
Fielded September through November 2022, the most recent SBCS was the third conducted since the COVID-19 pandemic began in early 2020. While the 2020 and 2021 surveys highlighted the devastating effects of the pandemic on small employer firms, the 2022 survey shows promising signs that some trends are returning to prepandemic norms. For the first time since the 2020 survey, firms in the SBCS were more likely to report that revenues and employment levels increased rather than decreased in the past 12 months, and the share of firms reporting that they were operating profitably rose substantially year-over-year.
Still, there are signs of uncertainty among respondents: Firms in the most recent survey remain less likely than firms in prepandemic surveys to expect revenue or employment growth in the coming year. Additionally, firms reported the persistence of challenges, both financial and operational. Financially, around four in five firms cited challenges related to rising costs, and close to half of firms reported difficulties paying operating expenses or navigating uneven cash flows. Nearly all firms also reported some type of operational challenge. Specifically, firms most often struggled to hire or retain qualified staff or deal with issues in their supply chains.
The 2022 survey also marks the first since 2020 in which firms were more likely to say they sought traditional financing rather than pandemic-related funding. As pandemic-related funding programs ended, the data show an accompanying rise in the share of firms that sought traditional financing in the form of loans, lines of credit, or merchant cash advances. The share of these applicants that were fully approved rose year-over-year but lags prepandemic levels.