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2023 Report on Employer Firms: Findings from the 2022 Small Business Credit Survey

Small business revenue, employment, and profitability each improved from 2021, but expectations worsened year-over-year. With the end of pandemic-related funding programs, the application rate for traditional financing rebounded to prepandemic levels.

Fielded September through November 2022, the most recent Small Business Credit Survey (SBCS) was the third conducted since the COVID-19 pandemic began in early 2020. While the 2020 and 2021 surveys highlighted the devastating effects of the pandemic on small employer firms, the 2022 survey shows promising signs that some trends are returning to prepandemic norms. For the first time since the 2020 survey, firms in the SBCS were more likely to report that revenues and employment levels increased rather than decreased in the past 12 months, and the share of firms reporting that they were operating profitably rose substantially year-over-year.

Still, there are signs of uncertainty among respondents: Firms in the most recent survey remain less likely than firms in prepandemic surveys to expect revenue or employment growth in the coming year. Additionally, firms reported the persistence of challenges, both financial and operational. Financially, around four in five firms cited challenges related to rising costs, and close to half of firms reported difficulties paying operating expenses or navigating uneven cash flows. Nearly all firms also reported some type of operational challenge. Specifically, firms most often struggled to hire or retain qualified staff or deal with issues in their supply chains.

The 2022 survey also marks the first since 2020 in which firms were more likely to say they sought traditional financing rather than pandemic-related funding. As pandemic-related funding programs ended, the data show an accompanying rise in the share of firms that sought traditional financing in the form of loans, lines of credit, or merchant cash advances. The share of these applicants that were fully approved rose year-over-year but lags prepandemic levels.

Suggested Citation

“2023 Report on Employer Firms: Findings from the 2022 Small Business Credit Survey.” 2023. Small Business Credit Survey. Federal Reserve Banks.

The views expressed here are those of the authors and not necessarily those of the the Federal Reserve Banks. Data used in this report may be subject to updates or changes.