Small Business Credit Survey Findings: Business Credit Challenges in Arizona, California, Hawaii, Oregon, and Washington for the Year 2021
The Federal Reserve's Small Business Credit Survey (SBCS) conducted in Fall 2021 has provided valuable insights into the credit experiences and challenges faced by small businesses in various states, including Arizona, California, Hawaiʻi, Oregon, and Washington.
While the SBCS reports for each state offer detailed findings, it is worth noting some key trends that emerged from the surveys:
- **Credit Access Challenges:** Small businesses, particularly those owned by minorities and women, often face difficulties obtaining adequate credit. Approval rates can vary, with many applicants facing rejections or receiving less credit than requested.
- **Loan Types and Preferences:** Business lines of credit, term loans, and SBA loans are among the preferred financing options. However, lines of credit tend to be less popular due to the application process and busy schedules of business owners.
- **Growing Demand for Credit:** The demand for loans or credit lines increased in recent years, with a rise in applicants from 46% in 2021 to 53% in 2022, indicating more businesses seeking financing due to market conditions.
- **Regional Variations:** In Pacific and western states such as Hawaiʻi, challenges related to geographic isolation and limited local banking services impact small business credit availability. This has led to reliance on non-traditional lenders or public banking efforts to improve access.
- **Public Banking Movement:** States including Arizona, California, Oregon, and Washington have explored or pursued state-level public banking initiatives aimed at improving access to credit for small businesses and addressing disparities in financial services.
If you wish to delve deeper into the specific findings for each state, the Federal Reserve Banks usually publish SBCS reports, often broken down by state or region, highlighting credit access, loan application outcomes, and business characteristics. Checking Federal Reserve district websites for the 2021 Small Business Credit Survey regional reports is highly recommended.
For instance, the Arizona SBCS report is available in a PDF file of 224 kb, while California's report is available in a PDF file of 266 kb. Hawaiʻi's SBCS report is available in a PDF file of 245 kb, Oregon's report in a PDF file of 200 kb, and Washington's report in a PDF file of 197 kb.
Additional resources for more detailed information include state economic development agencies or business bureaus for Arizona, California, Hawaiʻi, Oregon, and Washington, as well as academic or legal reviews related to public banking and small business finance in these states. These resources provide contextual analysis on credit market conditions and policy responses.
It is important to note that the Firms in Focus series at Fed Communities is a separate resource for further analysis and understanding of small businesses beyond the initial SBCS reports. This series provides analyses of business conditions across various demographic subcategories, including race and ethnicity of the owner(s), age of the business, and geography.
By understanding these trends and accessing the detailed reports, we can better support small businesses in navigating the complex credit landscape and work towards improving access to financial services for all.
- In the context of the Federal Reserve's Small Business Credit Survey (SBCS), small businesses in various states, such as Arizona, California, Oregon, and Washington, prefer diverse loan types like business lines of credit, term loans, and SBA loans for their financing needs.
- As part of an initiative to improve access to credit and address financial service disparities, some states like Arizona, California, Oregon, and Washington have pursued state-level public banking efforts, demonstrating an interest in small-business finance within their jurisdictions.
