“The health of the financial system is essential to small business operations,” says Holly Wade, Executive Director of NFIB’s Research Center. “While most owners are currently satisfied with their ability to borrow, the escalating cost of financing associated with high-interest rates is a significant issue for many.”
Newly released, the NFIB published their follow-up report to the banking survey they conducted in April of this year. Small business owners answered questions about their financing activities and experiences with banking and accessing credit. This is what the NFIB found:
Banking Choices
There were minor changes to the banks that small business owners used for banking purposes. There was a 3% decrease in the number of small businesses that select small or regional banks, and small businesses chose large banks 4% more often than they did a quarter ago (May).
- 64% use small/regional/local banks
- 18% use large banks
- 16% use medium banks
Less than 10% of small businesses said the primary bank they use for business banking is a credit union.
Small businesses have little interest in changing banks to conduct banking for their business. Only 3% of small business owners changed their primary financial institution in the last three months, and 83% of owners have no intentions of changing their primary financial institution in the next three months.
Borrowing
A quarter of small business owners borrowed from their bank in the last three months. More than half (56%) received a term loan while 37% received a line of credit. The most common loan term (51%) was 3-5 years. After that, 19% of loans had a term of 6-10 years. Small businesses received an adjustable-rate loan only 15% of the time.
The most popular reasons for borrowing were to meet operating and inventory expenses (33%), replace capital assets or make repairs (26%), and expand the business (20%). Businesses that did not borrow in the last three months did not borrow simply because they did not need financing (80%), but 3% said the cost of credit was too high.
Regarding borrower satisfaction, only 17% of those who received financing are unsatisfied with the loan amount and term. Otherwise, business owners reported the following about their satisfaction:
- 33% are very satisfied
- 33% are mostly satisfied
- 19% are moderately satisfied
When the borrower was not completely satisfied, the most cited issue was that the interest rate was too high (58%). This was followed by the amount of credit approved being too low (14%) and the application, approval, or closing process was too slow (9%).
Source:
Coleman Products
Webinar 9/12 – Your 2024 Budget and USDA Rural Small Business Lending Programs
Webinar 9/13 – Correctly Prepare the New SBA Guaranty 7(a) Purchase Package
SBA Franchise and NAICS Reports
2023 Lender Compensation Reports
Coleman’s Certified SBA Loan Training
About the U.S. Small Business Administration
The U.S. Small Business Administration makes the American dream of business ownership a reality. As the only go-to resource and voice for small businesses backed by the strength of the Federal Government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow or expand their businesses, or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov.
