Small Business Survey: Third Quarter 2012

  • Highlights

    Business Conditions

    Since the first-quarter 2012 Small Business Survey, most small businesses in the Southeast have lowered their expectations for improvements over the next 12 months. In addition, the net portion of firms anticipating hiring additional staff and anticipating sales growth decreased. The deterioration in the outlook was consistent across industries but not across age. The overall decreases in expectations in the survey sample were pulled down by the mature firms in the sample. Meanwhile, firms less than five years old revised their projections upward for the next 12 months.

    Financing Conditions

    About one-third of small businesses sought financing in the third quarter of 2012. About two-thirds of applying firms were able to obtain at least some amount of credit or equity financing. One major factor associated with financing obtainment was age. Thirty-nine percent of mature firms in the survey reported receiving the full amount of financing requested compared to only one-fourth percent of applying young firms.

    On average, applying firms applied for two forms of financing. Firms were most likely to receive financing by requesting vendor or trade credit and least likely to receive financing from angel investors or venture capitalists. Banks were the most common avenue of credit. Community banks, as opposed to national or regional banks, were the most common type of bank to which firms applied for credit. Moreover, applying firms were generally more successful at community banks than firms applying to large national banks. The majority of mature firms that did not borrow indicated that they did not need financing. However, young firms were evenly split in saying they did not borrow because they did not need it and because they did not think they could get it.

    Definitions

    Young versus mature firms: The results in this report are often presented according to "young" and "mature" firms. We distinguish young from mature by the age of the business; we consider firms less than six years old to be young.

    Small business: We define a "small" business as a firm with fewer than 500 employees.

  • Business Conditions

    Business
    Expectations
    Sales
    Expectations
    Hiring
    Expectations
    Capital
    Investment

    The outlook of small businesses for sales, capital investment, and hiring deteriorated from this year's first-quarter survey. Slightly smaller net portions of firms expect to make capital investments over the next 12 months than did previously, according to the third-quarter 2012 survey. The outlook for hiring and sales also deteriorated since the last survey, and the difference for both was statistically significantly different than the readings from the first quarter of 2012.

  • Financing Conditions

    Credit
    Demand
    Financing
    Satisfaction
    Reason for
    Applying
    Average
    Success
    Start-up
    Financing
    Reason for
    not Borrowing

    In line with past surveys, about one-third of firms applied for credit in the prior three months. Of those not applying for credit, most said they didn't need it but many were also discouraged from applying, fearing they would be turned down or offered bad credit terms. The difference in firms that received financing across industries was not as notable as it has been in the past.

  • Methodology

    Firms'
    Characteristics
    Age
    Distribution

    The Federal Reserve Bank of Atlanta conducts a semiannual survey of small business contacts in the Southeast to get their perspective on general business and financing conditions. The Atlanta Fed conducted the third-quarter 2012 survey during the first three weeks of October. The survey was completed by 495 respondents. The questionnaire for this survey, which varies slightly each time, is available on the Atlanta Fed website.

    More than half of respondents have fewer than 10 employees. The majority of respondents have revenues of less than $7 million. The median firm is 13 years old.

  • Facilitators

    The following organizations helped disseminate the third-quarter 2012 survey:

    Alabama

    • Alabama Small Business Development Center Network (AL)
    • Birmingham Business Alliance (AL)
    • Minority Business Development Agency Business Center (AL)

    Georgia

    • Airport Area Chamber of Commerce (GA)
    • Development Authority of Macon County and Chamber Commerce (GA)
    • Georgia Micro Enterprise Network (GMEN) (GA)
    • Wells Fargo (GA)

    Florida

    • Black Business Investment Fund of Central Florida (FL)
    • Flagler County Chamber of Commerce (FL)
    • Florida First Capital Finance Corporation (FL)
    • Indian River County Chamber of Commerce (FL)
    • Lake Wales Area Chamber of Commerce (FL)
    • Latin Chamber of Commerce of Broward County (FL)
    • Paragon Financial Group (FL)
    • South Florida Community Development Coalition (FL)
    • South Florida Regional Planning Council (FL)
    • SunBiz Showcase Alliance (FL)
    • Suncoast Community Capital (FL)
    • Upper Tampa Bay Chamber of Commerce (FL)

    Louisiana

    • Monroe Chamber of Commerce (LA)

    Tennessee

    • Johnson City/Jonesborough/Washington County Chamber of Commerce (TN)
    • Knoxville Chamber (TN)
    • Wayne County Chamber of Commerce (TN)