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Small employer girms in the U.S. indicate revenue, hiring strengthened in 2018, suggest outlook more tempered though 2019

Dallas Fed region saw higher share of startups, more minority-owned firms than nation, but firms were slightly less likely to report being profitable

For Immediate Release: April 16, 2019

The 12 Federal Reserve Banks today issued the Small Business Credit Survey: 2019 Report on Employer Firms, which examines the results of an annual survey of small-business owners nationwide. The report focuses on small employer firms, businesses that have between one and 499 full- or part-time payroll employees. It is the latest addition to the Reserve Banks’ hub for small-business research and analysis,

Fielded in the third and fourth quarters of 2018, the Report showed that while revenue and employment growth both improved year over year, profitability remained the same. The outlook for 2019 is more tempered. While credit demand increased marginally in 2018, the number of firms receiving credit remained essentially flat. Firms with high credit risk and startups continued to have financing shortfalls. Online lenders in particular saw applications increase by approximately a third, even though applicants were more dissatisfied with the interest rates offered.

Takeaways Specific to the Dallas Fed’s District

Eleventh District—LA, NM, TX

  • Taken together, states in the Eleventh Federal Reserve District show a higher share of startups, or those operating five or fewer years, than the national average (38% vs. 34%).
  • More than a quarter (26%) of firms are minority owned, compared with 18% of firms nationally.
  • Small businesses in the Eleventh District were less likely to report being profitable in 2017—29% operated at a loss by the end of the year, compared to 24% of firms nationally. Still, a majority (53%) operated at a profit.
  • More than a third of firms in the area (34%) had no outstanding debt, compared with 30% of their peers.


  • Texas firms were more likely to report using contract workers than the national average (48% vs. 41%).
  • Texas firms were much more likely to report a desire to grow their businesses “much larger” than its current size (34% vs. 27% nationally).
  • A greater share of firms in Texas use personal funds to finance their businesses compared with the national average (22% vs. 18%).
  • At 42%, firms in Texas were about equally likely as those in other parts of the country to apply for external financing in the prior 12 months. However, among those that did apply, Texas firms were much more likely to report business expansion or new opportunities as their reason for doing so (67% vs. 56% nationally).


  • Firms in Louisiana were much more likely to report operating at a loss in 2017 than their national peers (37% vs. 24%).
  • Fifty-three percent of Louisiana firms reported applying for financing in the prior 12 months. Those that did were much more likely to cite “meeting operating expenses” as their reason for applying (64% vs. 44% nationally).
  • Ninety-nine percent of external financing applicants in Louisiana applied for at least one loan or line of credit, compared with 84% nationally.
  • Among those that applied for a loan, line of credit or cash advance, Louisiana firms were far more likely to cite an existing relationship with a lender as a major factor in their search for credit (79% vs. 60% nationally).

Additional key findings across the entire survey can be found in the report’s executive summary. These findings include:

Performance and Expectations

  • The share of firms reporting revenue and employment growth increased from 2017, but the share of firms operating at a profit remained flat.
  • More than one-third of small firms (37%) reported adding payroll employees in 2018.
  • Employment gains were strongest at startups, firms with five or more employees, firms with more than $1 million in annual revenues and firms with younger decision-makers (56 years of age or under).
  • A majority (73%) of firms saw input costs increase from 2017.
  • Expectations for 2019 are mixed, with a majority of firms expecting revenues to increase but the net share of firms expecting payroll job growth to decline.

Financial Challenges and Reliance on Personal Finances

  • Nearly two-thirds of firms (64%) continued to experience financial challenges, including difficulties with managing operating expenses, scarcity of credit and challenges making debt payments.
  • Two-thirds (66%) of these firms relied on personal finances to cover their costs, while 40% of firms took out additional debt (respondents could choose more than one answer).

Financing Demand, Approvals and Sources

  • Respondents showed consistent year-over-year demand for new financing, with 43% of firms applying for new capital in 2018, similar to 40% in 2017.
  • Nearly half of applicants (47%) received funding for the full amount they requested, similar to the percentage in the 2017 survey.
  • Financing shortfalls were particularly pronounced among firms with weak credit profiles, unprofitable firms, younger firms and firms in urban areas.
  • Applications to online lenders[1] continued their growth trend in 2018, with 32% of firms applying to such lenders in 2018, up from 24% in 2017 and 19% in 2016. Borrowers chose online lenders mainly because of their speed to decision, the possibility of funding and, to a lesser extent, the lack of need for collateral.
  • More often, however, applicants went to lenders with whom they had existing relationships.

Additional analysis of the 2018 Small Business Credit Survey will be released throughout 2019 at The analysis will take an in-depth look into specific types of small businesses, including nonemployer firms, minority-owned firms and firms operating in low- and moderate-income communities.


Media contact:
James Hoard
Federal Reserve Bank of Dallas
Phone: (214) 922-5307


  1. The survey questionnaire asks about a range of nonbank online providers, including retail/payments processors, peer-to-peer lenders, merchant cash advance lenders and direct lenders. For purposes of topline findings, nonbank online lenders are grouped into one category, “online lenders.”
About the Small Business Credit Survey

The survey collects information about business performance, financing needs and choices and borrowing experiences of firms with fewer than 500 employees. Responses to thesurvey provide insight into the dynamics behind aggregate lending trends and about noteworthy segments of small businesses. The results are weighted to reflect the full population of small businesses in the United States. The survey is not a random sample; therefore, results should be analyzed with awareness of potential methodological biases.

The survey includes experiences from firms across all 50 states and the District of Columbia through the joint efforts of the Federal Reserve Banks of New York, Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City, Minneapolis, Philadelphia, Richmond, San Francisco and St. Louis. The 2018 survey collected 12,455 responses in total, 6,614 of which were from employer firms.