80% of Small Business Borrowers Point to Interest Rates as Their Top Problem when Accessing Credit
“Small business owners have been navigating higher interest rates since the Federal Reserve started hiking in March 2022, but have been increasingly affected by higher rates over the last six months. NFIB again asked about business owners’ financing activities and their experience in accessing credit. The health of the financial system is essential to small business operations, and this report offers insight into how well it is serving their small business clients,” reads the NFIB Financing Sales Survey published in December.
These are the key takeaways:
- 69% of small business owners use a small, regional, or local bank; 17% use a large bank; and 14% use a medium bank.
- In December, 74% of small business owners did not try to borrow money for their business within the prior three months.
- For the 26% that did borrow money, the small business owners were evenly split about their satisfaction: 32% mostly satisfied, 30% moderately satisfied, and 30% unsatisfied.
- The number one reason small business owners were not satisfied when borrowing was the high interest rates.
- When small businesses applied for financing, the top reasons were to expand business (29%), meet operating and inventory expenses (26%), and replace capital assets or make repairs (24%).
- 56% of the owners received a term loan, and 28% of owners received a line of credit.