The Federal Reserve Banks of Atlanta, Cleveland, New York and Philadelphia today jointly released findings from their Small Business Credit Survey. The survey found significant differences in credit demand across firm size segments during the first half of 2014. The report also highlighted the difficulty many small businesses have accessing credit.

The survey provides current information on the business conditions and financing needs of small businesses from a 10-state coverage area and gives state-level data for the respective states of Georgia, New York, Ohio and Pennsylvania.

Key findings include:

There are wide differences in credit demand between small- and larger-revenue firms.

• While 22 percent of firms overall reported applying for credit in the first half of 2014, there was considerably weaker demand among firms with less than $1 million in annual revenues than those with larger revenues.
• Only 18 percent of microbusinesses (those under $250,000 in revenue) applied for credit. By contrast, over 30 percent of small ($250,000–$1 million) and mid-sized firms ($1 million–$10 million) and 58 percent of commercial firms (greater than $10 million) sought credit.

Firms are looking for small amounts of credit (under $100,000) and borrow for expansion.

• More than half of applicants sought $100,000 or less in credit
• Almost 40 percent of those seeking credit said the primary purpose was to expand their business.
• Most credit applicants were experienced borrowers and growing.
• A third of firms report that financing costs have increased over the past 12 months

Large banks are a dominant source for credit, but online lending is sizeable.

• Small firms primarily turn to large national and regional banks for financing, but almost 1 in 5 applicants applied to an online lender in the first half of 2014.
• Approval rates were highest for online lenders and community banks. Of firms that applied to a small regional or community bank, 60 percent were approved for at least some of the financing sought.