Small Business Credit Survey

Closing Thoughts

The large contribution of small employer firms to the overall economy—in Texas, but also nationally—suggests an imperative to study the changes and trends of their successes and challenges. According to findings discussed here, Texas firms are, on average, optimistic about future business performance and growth potential, despite the fact that the majority are experiencing at least one financial challenge. More than one-third of firms report struggling to pay operating expenses, while 32 percent report issues with credit availability. Minority-owned firms are more likely to have trouble with these two issues than those that are not minority owned. A majority of Texas firms have outstanding debt, and a sizeable portion (42 percent) of firms applied for additional financing. Women-owned firms and minority-owned firms had lower rates of being granted the full amount of financing requested, a finding which is in line with prior reports. This year, most firms applied to small banks for financing, and those that did tended to find the experience more satisfactory than those that applied to large banks. Regarding employees, 75 percent of firms tried to hire in the prior 12 months, most with some amount of difficulty. Increasing starting pay and restructuring the responsibilities of existing employees were both common tactics for dealing with these challenges.

Looking forward, as Texas firms continue to plan for new growth and opportunities, there are numerous resources available across the state. Microlenders such as LiftFund, PeopleFund and BCL of Texas can help with sources of debt outside of traditional banks. Local and statewide economic development offices, chambers of commerce and other groups can help make connections. Finally, organizations like Texas SBDC Network can provide one-on-one advisement for entrepreneurs as they navigate challenges in years to come.