Thread by @NewYorkFed

2019 Saw Continued Revenue Growth Among Small Employer Firms, but Funding Shortfalls and Financial Challenges Threaten Ability to Weather COVID-19 Crisis → bit.ly/3aX7GfW

The importance of small businesses to our nation’s economy cannot be overstated. They account for 47.5% of the private-sector workforce and are vital to the fabric of local communities. → bit.ly/3aX7GfW
#smallbiz #toosmalltofail

Our Small Business Credit Survey (SBCS) offers information on small business financing needs, decisions, and outcomes to policymakers, lenders, and service providers. → bit.ly/3aX7GfW
#smallbiz

Though banks are the most broad-reaching lending channel, most small businesses do not use bank funding. This could affect which firms are able to access some bank loans for relief during the pandemic. → bit.ly/3aX7GfW
#smallbiz #toosmalltofail

The firms least likely to have a recent banking relationship include lower-revenue firms ($1M or less) and firms with non-white ownership. → bit.ly/3aX7GfW
#smallbiz

Firm performance was relatively strong prior to the pandemic. A majority of small businesses reported that their firms had experienced revenue growth, and more than 1/3 added employees. → bit.ly/3aX7GfW
#smallbiz

Input costs increased for 76% of firms over prior year. Profit margins fell for 40% of firms. → bit.ly/3aX7GfW
#smallbiz

Of firms that reported higher input costs, 61% raised the prices they charge. Input costs increased for 76% of firms over prior year. Profit margins fell for 40% of firms. → bit.ly/3aX7GfW
#smallbiz

In the prior 12 months, 66% of employer firms faced financial challenges; the most common challenge was paying operating expenses (43%). → bit.ly/3aX7GfW
#smallbiz

66% of employer firms faced financial challenges in the prior 12 months. → bit.ly/3aX7GfW
#smallbiz

For 77% of firms, retained business earnings are the primary source of funding. → bit.ly/3aX7GfW
#smallbiz

40% of firms hold outstanding debt in amounts up to $100,000. A majority of firms used personal guarantees as collateral to secure this debt. → bit.ly/3aX7GfW
#smallbiz

Owners’ personal finances remain deeply intertwined with the finances of their businesses, with 88% of firms relying on an owner’s personal credit score to secure financing. → bit.ly/3aX7GfW
#smallbiz

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.
Read the full report. → bit.ly/3aX7GfW
#smallbiz #toosmalltofail