WASHINGTON—The percentage of small businesses with employees applying for financing from credit unions was flat, according to the latest Small Business Credit Survey — a joint effort by the 12 regional Federal Reserve Banks.
The survey had responses from 6,614 small employer firms. The 2018 survey found that 43% of employer firms applied for financing in the previous 12 months, stated Keith Leggett, the former senior vice president and senior economist at the ABA, in his analysis.
Traditional bank lending remains the primary source of financing for the nation’s small businesses, although the share of applicants seeking financing from online borrowers has grown markedly, the report shows.
“The survey found that 9% of these small businesses applied for loans, lines of credit, or cash advances from credit unions. The same percentage of small businesses sought credit from credit unions in 2016 and 2017,” Leggett explained.
Other Findings
There was a slightly higher percentage of medium/high credit risk borrowers that sought financing from credit unions compared to low credit risk borrowers. The survey found 12% of medium/high credit risk borrowers sought credit from credit unions versus 9% of borrowers with low credit risk.
Among firms that did not apply for credit, 7% identified using credit unions regularly for loans, lines of credit, or cash advances. This is up from 5% in 2016, but down slightly from 8% in 2017, Leggett noted.