By Josh Dawsey
Small-business owners in New York, New Jersey and Connecticut are
still struggling to acquire credit for day-to-day expenses and
expansion, according to the Federal Reserve Bank of New York's Small
Business Borrowers Poll.
The survey offered a mixed bag of indicators for small businesses in
the region that encompasses all of New York and New Jersey and a small
sliver of Connecticut. The survey of 544 businesses released early
Tuesday shows banks in the New York Fed's region are still hesitant to
offer loans, particularly "microloans" less than $100,000. Small
businesses say those denials of small loans are damaging their growth
prospects, with 36% of those polled calling it the biggest obstacle.
Forty-one percent of those surveyed this year applied for new credit
in the past year, compared with 33% one year ago. But almost 30% of
firms said they didn't apply because they would almost certainly be
rejected, a slight uptick from 27% last year.
Factors that discouraged business included young applicants with
little credit, weaker sales from the previous year and hesitation to
deal with reluctant banks, said Claire Kramer, an officer in the
bank's outreach and community office.
Of those who applied, only 13% had their full request approved. Fifty
percent received some credit, while 37% were completely denied. That
is about the same as a year ago, when 62% received some credit.
One factor also hurting small-business growth: tepid sales. Forty-six
percent of the firms surveyed said they suffered decreased sales in
the past year, while only 36% reported an uptick. Eighteen percent
said there had been no change. Cutting costs was the biggest change to
55% of firms, a gloomy harbinger for quarters to come.
There are a few glimmers of hope, according to the bank. The poll
suggests future demand could rise because of applicants looking for
credit they couldn't previously attain. Also, the bank said it hoped
those currently discouraged would see a boost in prospects in quarters
to come.
Fed officials cautioned using the survey as a definitive indicator of
business trends in the region as different companies are surveyed each
year. Nationally, small-business loans were down 25% from their 2008
peak and declined 4.7% from 2010 to 2011, the New York Fed said.
Write to Josh Dawsey at joshua.dawsey@dowjones.com
(END) Dow Jones Newswires
August 14, 2012 00:01 ET (04:01 GMT)
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