small business access to capital survey

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Survey Results, March 2021

Sample: 800 U.S. small businesses with <100 employees

Small Business Access to Capital Survey

Key Findings

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3xmore funding applications by small businesses so far in 2021 compared to the first 9 months of the pandemic

84%of small businesses report that more funding is being made available to them in 2021 vs 2020

of small businesses are “very confident” they can get the funding they need today37%

but before the pandemic, the proportion of small businesses

that were “very confident” they could get funding was

50%

42%of small business funding applications during the pandemic have been to cover immediate financial needs

64% of small businesses predict higher revenue over the next 12 months

the proportion of small businesses which intend to apply for funding this year is 75%

the proportion of small businesses who want to

increase their capital expenditure this year is

44%

Funding During COVID


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Small businesses’ need for funding has grown during the pandemic

So far in 2021, small businesses have made almost 3 times as many funding funding applications, on average, as they did during the first 9 months of the pandemic.

The already-high volume of funding applications from Black-owned businesses increased the most during the past three months, compared to the previous 9 months. Women-owned businesses came a close second.

Encouragingly, 84% of small businesses report that more funding is being made available to them this year (note: this excludes government support such as PPP).


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Rejection and approval rates for small business lines of credit and loans

Overall, 70% of the survey respondents (556 out of 800) said they applied for funding during the pandemic. Among Black- and Hispanic-owned businesses, this rises to around 80%.

However, alongside women-owned businesses, Black- and Hispanic-owned businesses are more likely than other businesses to have their applications rejected.


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Which lenders are making more money available to small businesses?

According to the survey respondents, since January 2021, lenders such as credit unions and online lenders are approving more funding applications from women- and minority-owned businesses compared to the previous 9 months.


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Why are small businesses applying for loans and lines of credit?

Two in every five funding applications (42%) that have been made by small businesses since March 2020 have been to cover immediate financial needs.

Compared to the overall sample, women- and minority-owned businesses are more likely to apply for funding proactively to support future growth plans. Among these cohorts, Black-owned business are most likely to apply for funding proactively rather than reactively.

Business Confidence


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Has the pandemic affected small business borrowing confidence?

Yes, and confidence among Hispanic-owned businesses has taken the biggest hit during the pandemic. Before COVID, 52% were “very confident” that they could get the funding they need but today just 30% say the same.

Confidence has also fallen significantly among women-owned businesses. Before COVID, 49% were “very confident” that they could get the funding they need but today just 36% say the same.


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Looking ahead over the next 12 months, do small businesses believe they will get the funding they need?

On the whole, yes, but almost a third (29%) rate their chances as “average” at best. Respondents from women-owned businesses were most likely to express concerns about the availability of funding for small businesses over the next 12 months.

In comparison, respondents from Black- and Hispanic-owned businesses were more optimistic. These two cohorts were also the most likely to say they will apply for funding over the next 12 months.

Overall, three-quarters of small businesses say they will apply for funding in the year ahead.


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Will small businesses apply for funding proactively to support growth or reactively to cover costs?

Small businesses appear to be becoming more optimistic here. The majority (two-thirds) of funding applications they make over the next 12 months will be to support growth opportunities rather than meet immediate financial needs. This is up from 57% of recent funding applications (see slide 7).


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Income and cost predictions

Small business widely predict that their revenue will increase over the next 12 months (64% agree).

Respondents from Black-owned business express the highest levels of confidence about their revenue forecasts (70% predict an increase).

At the same time, however, 50% of small businesses overall believe expenses will increase over the next 12 months, compared to just 17% who say expenses will decrease.

Respondents from Hispanic-owned businesses were most likely to predict an increase in expenses.


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What will happen to small business profit and cash reserves?

As with revenue (see slide 12), the majority of small businesses predict that profit will increase over the next 12 months (58% agree). Again, Black-owned businesses are most optimistic here (65% agree).

Similarly, respondents from Black-owned business express the highest levels of confidence about future cash reserves. More than 1 in 2 (54%) say cash reserves will grow.


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Will small businesses increase capital expenditure this year?

Two in five small businesses (42%) say they will increase capital expenditure over the next 12 months.

As we’ve seen with several other financial indicators, Black-owned businesses expressed the highest levels of confidence here (46%).


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Will small businesses expand their full-time workforce this year?

Almost 1 in 2 small businesses (48%) predict that existing full-time employees will be asked to work longer hours over the next 12 months, which may either increase workers’ overtime or reduce levels of underemployment in the workforce.

Similarly, 44% of small businesses say they anticipate hiring more full-time employees this year, compared to just 11% who say they expect to reduce the number of full-time employees in their workforces. Hispanic-owned businesses are most likely to want to add full-time employees.


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Will small businesses expand their part-time workforces this year?

Part-time workforces are also predicted to grow, with 31% of small businesses saying they will hire more part-time employees over the next 12 months compared to just 17% who anticipate having to lay-off part-time employees.

Black-owned businesses are most likely to want to add part-time employees.

The number of hours worked by existing part-time employees, however, is predicted to remain fairly flat overall, with just a small increase predicted over the next 12 months.


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Will small businesses hire more contractors?

As with W-2 workers, the number of contractors working for small businesses is expected to grow over the next 12 months, with Hispanic-owned businesses expressing the strongest signals that they want to increase this segment of their workforces.

Overall, it appears that small businesses are most likely to want to hire full-time employees over the next 12 months, followed by part-time employees and then contractors.

Demographics and Firmographics


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Methodology


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MethodologyOnline questionnaire fielded by Qualtrics for QuickBooks between March 19, 2021 and March 22, 2021.

● Section 1: Screening (6 questions)● Section 2: Lending confidence (2 questions)● Section 3: Funding since January 1, 2021 (4 questions)● Section 4: Funding from March 2020 to December 2020 (4 questions)● Section 5: Why small businesses need/want funding (2 questions)● Section 6: Funding opinions and predictions (5 questions) ● Section 7: Investment and growth predictions (4 questions)● Section 8: Demographics and firmographics (5 questions)

Sample800 small businesses with annual revenue of more than $5,000 and less than 100 employees. Respondents comprised 404 business owners and 396 employees with good knowledge of the business’s finances

small business access to capital survey

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