New NFIB Survey: Increased Financing Costs Tops the List of Credit Concerns for Small Business Owners

Date: August 21, 2023

Latest NFIB banking survey tracks small business financial activities and expenses

WASHINGTON, D.C. (Aug. 21, 2023)NFIB’s Research Center released a follow-up survey following NFIB’s first banking survey released earlier this year. This survey asked small business owners about their banking activities and their experience in accessing credit. The survey was conducted by email from July 20-26, 2023.

“The health of the financial system is essential to small business operations,” said Holly Wade, Executive Director of NFIB’s Research Center. “While most owners are currently satisfied with their ability to borrow, the escalating cost of financing associated with high interest rates is a significant issue for many.”


Twenty-one percent of owners borrowed or tried to borrow from a bank or credit union in the last three months. Of those borrowing, 32% were very satisfied with the amount and terms offered for the financing received. Another 33% were mostly satisfied and 19% were moderately satisfied. Seventeen percent of owners reported that they were not satisfied.

Three-quarters of small business owners did not borrow or try to borrow money for business purposes in the last three months, nearly the same as in April 2023.

Banking Concerns:

Over half (58%) of small business owners who borrowed or tried to borrow reported high interest rates as their largest complaint in accessing financing.

Fourteen percent of owners reported the amount of credit approved being too low as their largest complaint, and another 9% reported that the application, approval, or closing process was too slow.

Seven percent of owners reported too much paperwork, 6% reported that the repayment schedule was too short, and 3% reported collateral requirement was too big.

Experience Accessing Financing:

Forty percent of owners reported that interest rates were a significant issue. Twenty-three percent reported it was a moderate issue and 13% said it was a mild issue.

Regarding collateral requirements, 16% reported it was a significant issue in the process of accessing credit and another 16% reported it as a moderate issue. Fourteen percent reported it was a mild issue and 55% reported it was not an issue.

Six percent of owners reported that the repayment schedule was a significant issue, 15% a moderate issue, and 12% a mild issue. Sixty-eight percent of small business owners reported that the repayment schedule was not an issue.

Thirteen percent reported that the paperwork requirements associated with accessing financing were a significant issue. Fifty-eight percent reported it was not an issue.

The amount of approved credit was not an issue for 62% of owners. The application, approval, or closing process was not an issue for 60% of respondents.

Reasons to Seek Financing:

A third of owners reported that the main purpose to seek financing was to meet operating and inventory expenses, 26% reported to replace capital assets or make repairs, 20% reported to expand their business, and 13% reported other. Refinance or pay down debt was the main financing purpose for 5% of owners.


Among those who borrowed, over half (56%) received a term loan. Thirty-seven percent received a line of credit, and none reported factoring.

Of those who received a term loan, about half (51%) reported receiving a 3-5 year loan and 19% reported a 6-10 year loan. Another 10% reported the term duration of their loans as longer than 10 years.

Among those who did not apply for financing in the last three months, 80% reported that the primary reason they did not was because they did not need financing. Three percent reported that credit costs were too high, and 1% did not think their application would be approved.

Line of Credit:

Fifty-three percent of small business owners currently have a line of credit for business purposes. For about half (54%), the total credit limit is $100,000 or more. Four percent reported less than $10,000, 20% reported between $10,000-49,999, and 19% reported $50,000-99,999.

The vast majority (80%) of business owners with a line of credit have not had their bank change the terms or conditions of that loan in the last three months.

Concerns on the Health of the Bank:

Small business owners’ concerns over the health of their bank have eased significantly since last reported in April. Over half (54%) of owners were not at all concerned about the health of their bank, an increase from 31% in April. Four percent were very concerned, 13% were moderately concerned, and 29% were slightly concerned.

Seven percent of owners have reached out to their bank about concerns related to the most recent bank failures. Thirteen percent reported that their bank reached out to them, and 80% reported that they did not reach out to their bank and their bank did not reach out to them.

Bank Stability:

Small business owners are generally confident in the stability of their bank and therefore not seeking out alternative financial institutions. Ninety-seven percent of owners have not changed their primary financial institution that they use for business purposes in the last three months. Only 6% of owners are considering changing their primary financial institution.

Financial State of Business and Economy:

Twenty-six percent of owners reported the current financial state of their business as excellent, 45% reported good and another 25% reported okay. Only 5% said poor.

When asked about the current state of their local economy, 3% reported excellent, 33% reported good, and 44% reported okay. One-in-five reported poor.

When it comes to the national economy, over half (58%) of owners assessed the national economy as poor, only 1% reported excellent, 9% reported good, and 32% reported okay. As for when the U.S. economy will enter the next recession, 52% of small businesses already think the U.S. is already in a recession. Two percent think the next recession will start in the July-September period, 17% believe a recession will occur in the October-December period, 20% reported the January-June 2024 period, and 10% reported July 2024 or later.

Bank Location and Size:

Forty-two percent of small business owners visit their bank in person more than once per week. Another 35% visit their bank several times a month and 15% said a few times a year. Sixty-four percent of small business owners use a small or regional bank. Eighteen percent use a large bank, 16% use a medium bank, and 3% reported other.

Beneficial Ownership Requirements:

The vast majority (90%) of small business owners are not at all familiar with the new beneficial ownership federal regulation. Nine percent are somewhat familiar, and only 1% are very familiar. While most small business owners will be required to comply with the regulation, few owners currently know of its existence.

Read the full survey here.

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