Relationship Between Banks and Small Businesses Assessed in New Survey

Date: May 03, 2023

Insight on how Main Street views banking and the economy

A new NFIB Research Center survey was released this week, assessing the relationship between small businesses and banks. The survey was conducted by e-mail from April 14-18, 2023, and offers insight into small business banking operations, their confidence in the banking system, and the economy more generally.

“Small business banking is a critical component of every small business,” said Holly Wade, Executive Director of NFIB’s Research Center. “Small businesses owners rely on their banks to help manage cash flow, expand their business, and receive financial advice. The recent bank failures put into focus the importance of a strong, stable small business banking system to the small business economy.”

Key findings of the survey include bank size, functions and services, borrowing needs, concerns on the health of the bank, business loans, sources of financing, current financial state, and other topics.

Bank Size:

Sixty-seven percent of small business owners use a small or regional bank. Seventeen percent use a medium size bank (PNC, Fifth-Third, Bank of the West, KeyBank, HSCB, Schwab, etc.). Fourteen percent of owners use a large bank (Chase, Citi, Bank of America, Wells Fargo, Capital One, U.S. Bank, etc.).

Functions and Services:

Of all the functions that banks provide, customer service was reported as the most important with 87% of small business owners reporting it was very important to them when choosing a bank for business purposes. Over half of owners (62%) reported that low banking fees are very important in choosing the bank they currently use for business purposes. When asked about the degree of importance of a convenient location, 66% of owners said it was very important. Competitive interest rates were reported as very important when choosing a bank for 53% of small business owners. Sixty percent of small business owners reported that online banking capabilities are very important.

Borrowing Needs:

Nearly three-quarters (74%) of small businesses have not borrowed money for business purposes in the last three months. Nineteen percent borrowed money for business purposes from a bank or credit union, 3% from a finance company or online lender, and another 3% from a different type of lender. Of those small businesses borrowing, about a third (34%) reported that they were very satisfied with the amount and terms offered for the financing received. Owners were also asked what the main purpose was for seeking financing and a little over a third (37%) said it was to meet operating expenses, 21% said to expand the business, and 24% said to replace capital assets or make repairs. Eight percent sought financing to refinance or pay down a debt and 9% said other.

Among those who did not apply for financing in the last three months, the vast majority (85%) reported that the primary reason they did not was because they did not need financing. Three percent reported they did not think their application would be approved and 1% reported that the credit cost was too high.

A little over half (55%) of small business owners use one bank for business purposes. Thirty-four percent use two banks and 11% use three or more banks for business purposes.

Concerns on the Health of the Bank:

Almost a third (31%) of small business owners reported that they were not at all concerned about the health of the bank they use for business purposes. Nineteen percent were very concerned, 23% moderately concerned, and 28% slightly concerned. Seven percent of owners have reached out to their bank about concerns related to the most recent bank failures. Fifteen percent said their bank reached out to them and 78% said they did not reach out to their bank and their bank did not reach out to them.

Business Loans:

A little over half of small business owners have a business loan. Twenty-one percent have a term loan and 31% line of credit. Forty-nine percent do not currently have a business loan.

Sources of Financing:

Small business owners were asked about the sources of financing they have used in their business in the last 12 months and 26% reported that they have used a business loan in the last 12 months. Another 33% used a line of credit, 70% used a credit card, and 32% used personal savings. Four percent had a loan from friends or family and another 4% reported home equity.

Current Financial State:

  • When asked to characterize the current financial state of their business, 30% reported excellent, 44% reported good, and 22% reported okay. Only 4% characterized the current financial state of their business as bad.
  • When asked about the current state of their local economy, only 5% reported excellent, 33% reported good, 48% reported okay, and 13% reported bad.
  • When asked about the national economy, none reported excellent, 6% reported good, 36% reported okay, and 58% reported bad. A little over half (55%) of owners think the U.S. is already in a recession.


  • Almost all (97%) of owners have a business bank account separate from their personal bank account. Among those with separate bank accounts for personal and business purposes, 56% use the same bank while 44% use different banks.
  • Ninety-eight percent of owners have not changed their primary financial institution that they use for business purposes in the last month.
  • Forty-one percent of owners regularly talk with someone at their bank about their business’s finances (at least once every 6-12 months).
  • About a third (36%) of small businesses reported that in a typical calendar quarter their business’s bank balance exceeds $250,000.

Read the full survey here.

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