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Federal Reserve survey: Most small businesses still not back to pre-pandemic levels

Posted by Celene Robert

March 9, 2022

The Federal Reserve Bank conducted a Small Business Credit Survey of 11,000 small companies across the U.S. — defined here as having fewer than 500 employees — from September 2021 to November 2021.

Key finding:

The survey found that 63% of small business respondents had yet to regain their pre-pandemic revenue levels and that 43% were experiencing lower staffing numbers. 

The survey’s three other major findings:

Many small businesses are still struggling financially.

According to the SBCS, the pandemic has hit small businesses disproportionately hard, particularly leisure and hospitality firms, and firms owned by people of color. Some 85% of small businesses reported they’d experienced financial challenges in 2021 compared to 81% in 2020.

Fifty-nine percent of respondents reported their businesses were in fair or poor financial condition at the time of the survey. Meanwhile, 48% percent of firms saw a decrease in revenue over the previous 12 months, while 38% saw revenue increase over the previous 12 months. 

Staffing and supply-chain issues are top challenges.

Some 77% of respondents reported they were experiencing negative effects from the pandemic at the time of the survey. The most frequently cited issues were supply-chain problems (60%) and hiring enough workers (60%). A vast majority of firms — 76% — reported decreased employment or that they’d paused hiring altogether.

Financing harder to get, but needed for operating expenses.

Overall, fewer small businesses availed themselves of pandemic-related financial aid compared to 2020. Some 66% of small business respondents received pandemic-related financial assistance in 2021 versus 87% in 2020. The share of firms receiving the full amount of Paycheck Protection Program funding sought also fell to 67% in 2021 versus from 76% in 2020.

Businesses were less likely to seek traditional financing in 2021. The share of respondents who sought traditional funding fell to 36% in 2021 versus 37% in 2020 versus 43% in 2019. 

Applicants were also less likely to receive financing in 2021 compared to previous years. The number of applicants receiving traditional funding they applied for dropped to 30% in 2021 from 36% in 2020. According to the survey, the firms most susceptible to the negative effects of the pandemic are less likely to receive the financing they need.

Finally, small businesses that did seek financing were more likely to need it to cover operating expenses than for expansion. The number of applicants who sought funds for operating expenses increased to 63% in 2021 from 43% in 2019. Applicants seeking funding for business expansion dropped to 41% in 2021 from 56% in 2019.


Celene Robert
Celene Robert

Celene heads up the marketing at Escalon. Passionate about helping companies grow their business, she spends her days finding new ways to bring essential business services to startups, SMBs, and growth-minded companies. Based in the PNW, she’s the proud owner of 8 pairs of Birkenstocks and a sassy, cuddly cat.

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