An annual survey by the Small Business Division of the Federal Reserve paints a grim picture for our smallest, and largest percentage, of small businesses. The problem is appears to be getting worse.
The heart of the report is a survey sent to nonemployer firms. These companies have no employees other than the business owner.
%
Businesses Have No Employees
Trillion in Total Annual Sales
Highlights
- While revenue increased, those reporting financial challenges increased
- More than 1/2 reported revenues were still lower than in 2019
- Those with less than $100,000 in revenue are struggling the most
- Despite changes to the PPP to allow low-revenue nonemployers to apply, less than half received the full amount they sought
- All nonemployers had challenges accessing financing, with 29% reporting financing met their needs.
- Low-revenue nonemployers are 1/2 as likely to get a loan or line of credit
Examples of Nonemployers?
Think of artists, realtors, stylists, startup companies, consultants, in-home childcare providers, and other home-based businesses
- 26% Professional Services & Real Estate Agents
- 22% Nonmanufactured goods production & associated services
- 21% Business supports & consumer services
- 11% Healthcare & education
- 8% Retail
- 7% Leisure & hospitality (ex. Air BnB)
- 3% Finance & Insurance
- 1% Manufacturing
%
Report Financial Hardships in 2021
up from 81% in 2020
%
smaller nonemployers that grew
compared to 31% of large-revenue firms
%
smaller firms that are in poor financial condition
compared to 16% of larger nonemployers
%
of nonemployers applied for pandemic financial assistance
compared to 76% of firms with employees
%
of small nonemmployers received all of the PPP they sought
compared to 64% of larger nonemployers
%
collected unemployment
Nonemployer firms are less likely to use large small banks for financial services (48%) vs. companies with employees (56%) or even small banks (34% nonemployers vs 47% firms with employees.
Nonemployer firms turn to credit unions (20% vs 13% employer firms) and online lenders/fintech companies (11%)
