2025 Report on Employer Firms: Findings from the 2024 Small Business Credit Survey

Survey Findings

Firm performance and expectations were little changed year over year, though the revenue performance index declined for the second consecutive survey cycle as challenges with sales persisted.

• Employment growth, along with expectations for revenue and employment growth, held steady between the 2023 and 2024 surveys. However, the revenue performance index decreased by 7 points this cycle following a 3-point decline between the 2022 and 2023 surveys. For the first time since 2021, firms were more likely to report that revenues decreased rather than increased in the year prior to the survey. All performance indices have recovered somewhat from their pandemic-era lows but remain below prepandemic levels.
• Reaching customers and growing sales was the most commonly reported operational challenge. While the share of firms that cited reaching customers as an operational challenge increased from 53% in 2023 to 57% in 2024, there were declines in the shares that reported challenges with hiring and supply chains.
• Rising costs of goods, services, and/or wages remained the most common financial challenge, with 75% of firms citing this issue. More than half of firms cited paying operating expenses (56%) or uneven cash flows (51%) as challenges.

The share of firms with more than $100,000 in outstanding debt remained higher than prepandemic levels, and elevated levels of existing debt played an increasing role in the denial of financing applications.

• The share of firms with no outstanding debt (29%) was virtually unchanged year over year. The 39% of firms with more than $100,000 in debt also was unchanged from 2023 but remained higher than during prepandemic years.
• Fifty-nine percent of firms sought new financing in the 12 months leading up to the survey, with 40% of applicants seeking less than $50,000. The most common reasons for seeking financing were meeting operating expenses (56%) and pursuing an expansion or new opportunity (46%).
• While 41% of applicants received all the financing they sought, 36% received just some, and 24% received none.
• Firms that were denied all or some of the financing for which they applied were more likely in 2024 than in 2021 to say that they were denied because they already had too much debt (41% in 2024 versus 22% in 2021).
• Among the firms that did not seek financing, a majority (57%) said that they did not do so because they already had sufficient financing.

The share of firms that applied for loans, lines of credit, or merchant cash advances remained stable year over year. Approvals were steady as well, but applicants' satisfaction with their lenders fell.

• Thirty-seven percent of firms applied for a loan, line of credit, or merchant cash advance in the prior 12 months, unchanged from 2023 and in line with prepandemic levels.
• Applicant firms were less likely to apply at large banks in 2024 than in 2023 (39% versus 44%). Application rates at other sources mostly remained stable.
• The share of applicants fully approved was steady year over year but remained below prepandemic levels.
• Applicants that sought financing at small banks were more likely to be fully approved (54%) than those that sought financing from other lenders.
• Net satisfaction with lenders among financing applicants declined overall between 2023 and 2024, falling most among applicants to online lenders (from 15% to 2%). Applicants at online lenders were more likely than applicants at other sources to experience challenges with their lender. High interest rates and unfavorable repayment terms were the most common challenges at online lenders.

The 2024 SBCS sought insight on some special topics, including the composition of firms’ customers, the physical space in which firms operate, and the insurance coverage they maintain.

• The survey finds that, although individuals are a significant source of sales for a majority of firms, about one in three businesses sells mostly to other businesses or entities. When firms were asked about the types of customers that account for 10% or more of their sales, the most common response was individuals (67%), followed by other businesses (45%), state and local governments (15%), and the federal government (7%).
• Most businesses serve a significant portion of their customers at their business headquarters (21%) or within 50 miles of their headquarters (59%). Seven percent of firms said that international customers account for at least 10% of their sales.
• The majority of firms (59%) rent the space that is used as their business headquarters, while 17% own the space. Another 17% are headquartered in a residence. The distribution of firms’ physical locations is virtually unchanged since this question was last asked in 2019.
• In 2024, 25% of businesses said that they had moved one or more times in the past five years, lower than the 31% that said the same in 2019.
• Among the types of insurance coverage carried by businesses, liability insurance was the most common (91%). The most frequently cited insurance-related challenge was cost (70%), followed by complicated/confusing policies (29%).