Little Sign Of Credit Crunch For Small Businesses

June's NFIB survey showed little sign of an incipient credit crunch among small businesses.

• Just 2% of small business owners reported that "all their borrowing needs were not satisfied", and the same percentage reported that financing was their "biggest problem" - a 2 point drop from May.
• 87% had no problems on the lending front (27% reported all credit needs met and 60% were not interested in a loan). And just 6% reported that their last loan was harder to get than in previous attempts.
• The net credit conditions expectation remained around the same level (-8%) as it has been since last August, a 2pp improvement from May's -10%.
• The NFIB report sums up the financing situation with "credit remains available but the price is rising as the Federal Reserve raises its policy rate". Indeed, the Fed's Senior Loan Officer Survey has tightened sharply, with the demand reading at -53.3% in the latest survey, below the pandemic lows and around levels that prevailed in the 2008-09 global financial crisis.
• In short, despite a clear tightening of credit conditions alongside the Fed's hiking cycle, financing does not appear to be a problem for small businesses.
• Conditions will probably worsen in line with the Senior Loan Officer Survey, but the majority of the tightening so far appears to have come via higher rates and not balance sheet constrained/risk averse banks.

Source: Federal Reserve, NFIB, MNI