Research & Data

Texas Service Sector Outlook Survey

Special Questions

October 29, 2013
1. How do borrowing conditions facing your firm compare to those six months ago?
    Oct '11
(percent)
Oct '12
(percent)
Oct '13
(percent)
  Eased substantially 1.9 1.1 1.9
  Eased somewhat 11.4 11.1 8.7
  No change 32.9 48.9 40.4
  Tightened somewhat 14.6 7.8 10.6
  Tightened substantially 8.9 3.9 3.1
  Not applicable–haven’t sought credit 30.4 27.2 35.4

2. How does the cost of credit compare to what it was six months ago?*
    Oct '11
(percent)
Oct '12
(percent)
Oct '13
(percent)
  Eased substantially     3.7
  Eased somewhat     25.5
  No change     31.1
  Tightened somewhat     3.7
  Tightened substantially     0.0
  Not applicable–haven’t sought credit     36.0

3. To what extent is your business having difficulty obtaining financing for desired long-term uses such as capital expenditures?
    Oct '11
(percent)
Oct '12
(percent)
Oct '13
(percent)
  No difficulty 32.5 29.4 38.1
  Some difficulty 21.7 23.3 10.0
  Substantial difficulty 5.7 1.7 3.8
  Extreme difficulty 3.8 5.0 2.5
  Not applicable–haven’t sought credit 36.3 40.6 45.6

4. To what extent is your business having difficulty obtaining financing for desired short-term uses such as paying workers and acquiring inventories of material or supplies?
    Oct '11
(percent)
Oct '12
(percent)
Oct '13
(percent)
  No difficulty 37.3 36.3 36.3
  Some difficulty 9.5 14.0 9.4
  Substantial difficulty 3.2 1.1 0.6
  Extreme difficulty 2.5 4.5 1.9
  Not applicable–haven’t sought credit 47.5 44.1 51.9

5. Has your firm’s production and/or sales been adversely affected by difficulty obtaining credit?
    Oct '11
(percent)
Oct '12
(percent)
Oct '13
(percent)
  Yes–significantly 5.1 5.0 2.5
  Yes–somewhat 14.6 10.6 6.9
  No 38.0 37.2 35.6
  Not applicable–haven’t had problems obtaining credit 8.2 9.4 12.5
  Not applicable–haven’t sought credit 34.2 37.8 42.5

6. Has your firm reduced hiring and/or increased layoffs due to difficulty obtaining credit?
    Oct '11
(percent)
Oct '12
(percent)
Oct '13
(percent)
  Yes–significantly 3.2 2.8 1.3
  Yes–somewhat 13.9 10.6 5.6
  No 39.9 42.5 40.0
  Not applicable–haven’t had problems obtaining credit 8.9 7.8 11.3
  Not applicable–haven’t sought credit 34.2 36.3 41.9


Texas Retail Outlook Survey

Texas Retail Outlook Survey

Special Questions

October 29, 2013
1. How do borrowing conditions facing your firm compare to those six months ago?
    Oct '11
(percent)
Oct '12
(percent)
Oct '13
(percent)
  Eased substantially 2.2 4.1 0.0
  Eased somewhat 17.4 14.3 17.9
  No change 30.4 55.1 43.6
  Tightened somewhat 19.6 10.2 7.7
  Tightened substantially 4.3 2.0 0.0
  Not applicable–haven’t sought credit 26.1 14.3 30.8

2. How does the cost of credit compare to what it was six months ago?*
    Oct '11
(percent)
Oct '12
(percent)
Oct '13
(percent)
  Eased substantially     0.0
  Eased somewhat     33.3
  No change     20.5
  Tightened somewhat     12.8
  Tightened substantially     0.0
  Not applicable–haven’t sought credit     33.3

3. To what extent is your business having difficulty obtaining financing for desired long-term uses such as capital expenditures?
    Oct '11
(percent)
Oct '12
(percent)
Oct '13
(percent)
  No difficulty 37.0 38.8 43.6
  Some difficulty 28.3 26.5 10.3
  Substantial difficulty 4.3 2.0 2.6
  Extreme difficulty 4.3 8.2 0.0
  Not applicable–haven’t sought credit 26.1 24.5 43.6

4. To what extent is your business having difficulty obtaining financing for desired short-term uses such as paying workers and acquiring inventories of material or supplies?
    Oct '11
(percent)
Oct '12
(percent)
Oct '13
(percent)
  No difficulty 47.8 49.0 48.7
  Some difficulty 15.2 14.3 5.1
  Substantial difficulty 0.0 2.0 2.6
  Extreme difficulty 4.3 8.2 0.0
  Not applicable–haven’t sought credit 32.6 26.5 43.6

5. Has your firm’s production and/or sales been adversely affected by difficulty obtaining credit?
    Oct '11
(percent)
Oct '12
(percent)
Oct '13
(percent)
  Yes–significantly 2.2 6.1 0.0
  Yes–somewhat 17.4 14.3 5.3
  No 43.5 42.9 39.5
  Not applicable–haven’t had problems obtaining credit 13.0 16.3 21.1
  Not applicable–haven’t sought credit 23.9 20.4 34.2

6. Has your firm reduced hiring and/or increased layoffs due to difficulty obtaining credit?
    Oct '11
(percent)
Oct '12
(percent)
Oct '13
(percent)
  Yes–significantly 4.3 6.1 0.0
  Yes–somewhat 17.4 16.3 5.1
  No 41.3 44.9 46.2
  Not applicable–haven’t had problems obtaining credit 13.0 12.2 15.4
  Not applicable–haven’t sought credit 23.9 20.4 33.3

*Question added in 2013.
Survey collection period: 10/8/2013–10/11/2013


Special Questions Comments

Special Questions Comments

These comments have been edited for publication.

Broadcasting (except Internet)

  • While our company has not sought credit, some of our customers report that they are successfully obtaining credit for business expansion and for real estate development.

Securities, Commodity Contracts, and Other Financial Investments and Related Activities

  • We are in unusually good financial condition. We anticipated and concluded some financing several months ago. We understand the market has tightened somewhat and rates have increased along with the qualifications for lending lines.

Insurance Carriers and Related Activities

  • The real credit-related issue affecting our business is that our customers are having more difficulty with credit.
  • The Affordable Care Act is having an enormous impact on businesses, including ours.

Rental and Leasing Services

  • We have a fortress balance sheet, so capital through borrowing is always accessible, but the regulatory documents, forms, guarantees, requirements and red tape one must go through these days to complete a loan or even continue an open line of credit are burdensome. They slow the process of business down.

Professional, Scientific, and Technical Services

  • We fund our day-to-day operations out of retained capital and cash flow and have a $2 million line of credit guaranteed by two of our principals, which has gone unused for five years. One of our clients, a major bank, is aggressively seeking qualified loan applicants. We would guess the lending standards are still high and thinly capitalized companies are probably having challenges.
  • We have a 5 percent interest rate floor when we borrow on our line, which we try to keep to an absolute minimum, so fluctuations in interest rates do not affect us much. We did recently get offered 4.5 percent for one deal that was going to take longer than usual, but we usually pay within terms to avoid interest altogether. We have had no problems obtaining credit.

Administrative and Support Services

  • Because of our mostly goodwill assets and limited hard assets, we are always asked for a personal guarantee. It makes it very hard for the corporation to establish a credit rating.
  • Uncertainty in the marketplace is having a negative impact on sales.
  • We have been with the same local banking group for many years and have established lines of credit.

Ambulatory Health Care Services

  • We are not dependent on credit for capital or operational expenses, but when we needed credit, we did not have any problems in finding it. Finding credit has become easier than it was a year ago.
  • As a health care provider, we have forgone capital investment in the second half of this year because we are awaiting the implications of the Affordable Care Act.

Nursing and Residential Care Facilities

  • While we have not sought credit, we do monitor the market as we have sizable tax-exempt bonded indebtedness. Our impression is that bond market conditions are more favorable today for borrowers than they were six months ago, particularly when considering the feasibility of refinancing. We also expect this to be a short-term condition in light of the federal government shutdown.

Accommodation

  • We are a privately owned company and have not borrowed in the past few years.

Motor Vehicle and Parts Dealers

  • While we have had no issue in obtaining credit, many of our smaller customers are experiencing varying levels of difficulties. Banks in particular are more stringent in abiding by credit limits. In our opinion, this has had a minor effect on overall business levels so far. We are slightly concerned about any additional tightening, which we feel would be more impactful.

Building Material and Garden Equipment Supplies Dealers

  • Banks are still fairly tight, and we do not understand why as business has stabilized.

 

Questions regarding the Texas Service Sector Outlook Survey can be addressed to Amy Jordan at amy.jordan@dal.frb.org.

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