Small Businesses Only Slowly Feeling The Credit Pinch

The May NFIB survey showed increasing pessimism among small businesses that credit conditions would continue to get worse in the months ahead. The survey showed that the net percent seeing credit conditions getting "easier" minus "harder" in the next 3 months came in at -10%, the lowest since December 2012.

• That's in line with the Fed's Senior Loan Officer Survey which - alongside broader credit conditions - have seen both standards and demand for small business credit deteriorate in the past year. The demand reading hit -53.3% in the latest survey, below the pandemic lows and around levels that prevailed in the 2008-09 global financial crisis.
• While the banking turmoil that began in March has been putting increasing focus on these readings, there aren't any clear signs that tightening credit conditions have begun to weigh heavily on small business activity.
• As the NFIB report notes, just "1% of owners reported that all their borrowing needs were not satisfied", with 27% reporting "all credit needs met" and "63% said they were not interested in a loan". And just "4% of owners reported that financing was their top business problem".
• There are some signs of tightening that may take time to feed through - a net 24% reported paying a higher rate on their most recent loan, though that was down 2 points on the month; a net 6% reported their last loan "was harder to get than in previous attempts."

Source: NFIB, Federal Reserve, MNI