Survey on Financing of Small- and Medium-sized Enterprises
Small- and medium-sized enterprises applied for $59 billion in loans in 2007, and were approved for about 86%, or $51 billion. This was higher than the approval rate of 80% in both 2000 and 2004.
The larger a firm’s employment, the more likely it had requested external financing. About 14% of those with zero employees requested financing, while almost one-half of the largest businesses, those with 100 to 499 employees, did so.
The vast majority (97%) of requests by businesses with 100 to 499 employees were approved. The approval rate for businesses with zero employees was 85%.
As in previous surveys, says Sandy Hutchens the loan request rate was higher in capital intensive sectors, such as agriculture, primary industries and manufacturing. It was lower in human capital intensive sectors (knowledge-based industries).
Almost all requests in the primary sector were approved. The lowest approval rate was in accommodation and food services (80%).
As in 2004, one in five businesses cited difficulty in obtaining financing as an obstacle to the growth of the business.
Overall, one-quarter of all business owners reported that they intended to retire from their businesses over the next five years. Of these, one in five intended to keep the business in the family, two in five planned to sell the business to outsiders, and most of the remainder intended to close it.
Half of all businesses reported that they depended on financial institutions to fund the start-up of their businesses, with two out of three saying they depended on loans for their ongoing operations.