Federal Reserve Small Business Credit Survey

Federal Reserve Small Business Credit Survey

This past March the Federal Reserve Banks of New York, Atlanta, Boston, Cleveland, Philadelphia, Richmond, and St. Louis published the results of their 2015 Small Business Credit Survey. The survey offers insight on business conditions and the credit environment from the perspective of small business owners.

What does the survey tell us? If anything, credit unions could be more involved in serving small and microbusinesses. We’ve included a few key survey highlights to illustrate why we think so followed by a link to download the complete survey results. Happy reading!

Small Institutions Are Favored

“Credit applicants were most successful and most satisfied with their borrowing experience at small banks.”

Though the quote above focuses on small banks, credit unions fall into this category of smaller, service-focused institutions.

The Opportunity Fits Credit Union Risk Tolerance

“The majority of employer respondents, 63%, hold debt. Most debt is in small amounts and secured with personal assets.”

You don’t have to be a “commercial lender” to satisfy business credit needs as business loan needs and collateral expectations match with credit union risk tolerance and experience. In other words, credit unions excel at making small collateralized loans, and that is precisely what many small businesses need.

Losing Opportunity to Online Lenders, But Satisfaction Low

“30% of microbusiness applicants and 22% of small firms applicants ($100K–$1M in annual revenues) applied to an online lender.”

Small and microbusinesses are great target markets for credit unions, but a fair number of these firms seek their financing from online lenders as noted in the quote above. According to the survey, however, satisfaction for these channels is a lot lower than for traditional bank lenders. Why? High interest rates and unfavorable repayment terms. This is quite the opportunity for credit unions.

Download the Survey Results

The full survey report contains a variety of interesting data trends. The material might be useful as a support resource for strategic planning discussion, product development exploration, etc. Download a copy directly from the Fed at:

https://www.stlouisfed.org/~/media/Files/PDFs/Community%20Development/Report-SBCS-2015.pdf

You may also want to grab a copy of the NCUA’s Summary of Key Changes to NCUA’s Member Business Loan Final Rule, available here:

https://www.ncua.gov/About/Documents/Agenda%20Items/AG20160218Item2c.pdf

Glatt Consulting Strategic Planning Support

In need of a facilitator for your 2016 strategic planning session? We have two weekend fall spots remaining and a handful of weekday spots. Learn more about our general process here: https://glattconsulting.com/2016/03/29/2016-credit-union-strategic-planning

If you’re interested in receiving a planning facilitation proposal, or in discussing a customized approach to planning, let us know.

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