Small businesses with lower credit risk tend to receive all the financing they seek more often than businesses with higher credit risk, which may be newer, smaller, and more in need of financing.
Can small business owners access the credit they need? The Federal Reserve's Small Business Credit Survey (SBCS) provides insights into the credit access
The SBCS is a comprehensive survey conducted by the Federal Reserve's 12 Reserve Banks, in collaboration with the national Small Business Credit Survey. The survey collects data from firms with fewer than 500 employees, providing a rich dataset on small business credit access.
The SBCS categorizes firms into three different credit risk categories: low, medium, and high. Firms with lower credit risk consistently receive the full amount of financing they seek more frequently than firms with riskier credit profiles.
Small firms with annual revenues above $1 million were more likely to receive the full amount of financing compared to firms with revenue below that threshold. This finding highlights the importance of firm size and revenue in determining credit access.
Small veteran-owned firms are generally at par with small non-veteran-owned firms regarding their full access to the financing requested. However, short-lived gaps between these two groups occasionally appear, suggesting that veteran-owned firms may face unique challenges in accessing credit.