Small Businesses

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

  • 2 min Read
  • March 9, 2022

Author

Escalon

Table of Contents

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.

Talk to our team today to learn how Escalon can help take your company to the next level.

  • Expertise you can trust

    Our team is made up of seasoned professionals who bring years of industry experience to the table. You gain a trusted advisor who understands your business inside out.

  • Quality and consistency

    Say goodbye to the hassles of hiring, training and managing in-house finance teams. You will never have to worry about unexpected leave of absence or retraining new employees.

  • Scalability and Flexibility

    Whether you’re a small business or a global powerhouse, our solutions scale with your needs. We eliminate inefficiencies, reduce costs and help you focus on growing your business.

Contact Us Today!

Tap into the latest insights from experts in your industry

Leadership & Growth

How to Build Leadership Pipelines to Sustain Growth 

Growth often hinges on capable leadership at every level. Yet many medium-sized businesses focus on filling immediate management vacancies rather...

Read More
uncategorized

How to Avoid Operational Bottlenecks When Scaling Beyond $10M ARR 

Reaching $10 million in Annual Recurring Revenue (ARR) is a major milestone, but scaling further brings new operational hurdles. From...

Read More
Press Releases

Escalon Achieves SOC 2 Type II Compliance

April 30, 2025– Escalon Services, a leading provider of back-office solutions for startups and SMBs, proudly announces that it has...

Read More
People Management & HR

From 25 to 100 Employees: The HR Systems You Need to Stay Compliant

Moving from 25 employees to 100 is a tipping point for many businesses. What worked with a lean, close-knit team...

Read More
uncategorized

Compensation Strategies for Medium-Sized Businesses: How to Stay Competitive

Compensation isn’t just about paying people to show up and do work; it’s a strategic tool that can attract top...

Read More
Accounting & Finance

Common Accounting Mistakes That Cost Medium-Sized Businesses Millions 

Accurate accounting is the bedrock of any successful business operation. Yet, medium-sized businesses—those that have grown beyond the small-business stage...

Read More
Taxes

1099 vs. W-2: How to Ensure Compliance and Reduce Risk 

Distinguishing between independent contractors (1099) and employees (W-2) is a pivotal compliance matter for U.S. businesses. Misclassification can result in...

Read More
Accounting & Finance

Capital Raising in Spring: How to Position Your Startup for Investor Interest

Spring symbolizes renewal, making it an apt metaphor for startups aiming to secure fresh capital to fuel their next growth...

Read More
uncategorized

Spring Clean Your Payroll: Essential HR Best Practices for Scaling Startups

Payroll is more than just issuing paychecks—it’s a complex, high-stakes process that can significantly impact employee satisfaction, legal compliance, and...

Read More