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U.S. Small-Business Owners' Credit Expectations Improve

U.S. Small-Business Owners' Credit Expectations Improve

Three in four owners feel confident they can get credit if needed

by Dennis Jacobe

PRINCETON, NJ -- U.S. small-business owners expect credit to be somewhat more easily available over the next 12 months. The Wells Fargo/Gallup Small Business Index poll conducted in April shows a net difference of -7 percentage points between the 25% of small-business owners who say credit will be easy to get in the next 12 months and the 32% who say it will be difficult. Though still negative, this is the smallest gap and best perceived credit availability in three years.

Trend: Wells Fargo/Gallup Small Business Index -- Future Expectations Dimension

The current net difference in credit availability expectations is improved from -11 in January and -21 in November 2011. This gap is similar to what it was three years ago, at -6 in April 2009. While today's gap is an improvement, it is nowhere near the +45 of June 2007, prior to the start of the recession and financial crisis. The +14 reading in September 2008 is the last time this measure was positive.

The current proportion of U.S. small-business owners (25%) who feel it will be somewhat or very easy to get credit over the next 12 months is down slightly from 27% in January, but otherwise is the highest since April 2009. The 32% who expect credit to be somewhat or very difficult to get is down from 38% in January and 43% in November 2011.

Actual Credit Availability Also Improved but Still Negative

Looking back over the past 12 months, 30% of small-business owners say it was somewhat or very difficult for their companies to get credit. However, 22% of owners say credit was somewhat or very easy to get.

This actual credit-availability-experience gap of -8 points matches that of January, and is the smallest gap in three years, since the 0 of April 2009. Despite this improvement, small-business owners' self-reported credit availability is far from the +39 of June 2007.

Trend: Wells Fargo/Gallup Small Business Index -- Current Credit Availability

Most Owners Are Confident About Getting Credit if Needed

Three in four small-business owners (76%) say they have previously borrowed money or used credit for their business. Just about the same number (73%) say they are extremely (14%), very (20%), or somewhat (39%) confident that they could get credit for their business if they needed it.

If you needed credit today, how confident do you feel that your business would be able to obtain it?

Credit Is Important to Many Small Businesses

About one in five small-business owners (20%) say they use most or all of the credit available to them. Another one in four (24%) use part of what is available, while about half (47%) say they use only a little.

When asked what having credit has allowed them to do, 76% of owners say it has made it easier for them to run their business on a daily basis and 63% say it has helped them stay open. Half of owners say credit has helped them expand their products and services, take more risks, and be more profitable. One in three say it helped their business with their payroll, while one in five say it allowed them to hire.

Now thinking about the money you have borrowed for your business, has having credit ... ?


Slightly increased optimism about future credit availability is clearly a positive for the many small companies depending on it. It may be one reason U.S. small-business-owner optimism reached its highest level since 2008 in April.

Even though many small-business owners have minimized their credit exposure -- doing less borrowing and taking on less debt -- since the financial crisis four years ago, the ability to borrow and use credit remains essential for many other small businesses. Nearly two in three owners say credit has helped their businesses stay open, one in three say it helped with payroll, and one in five say it allowed them to hire.

Getting U.S. small businesses healthy, growing, and hiring again probably requires that credit availability increase from the current negative gap to positive territory. While credit is unlikely for many years -- if ever -- to be as easy as it was before the financial crisis, a positive gap seems reasonable. Of course, even achieving small-business owners' optimistic outlook for credit availability over the next 12 months likely depends on the economy's gaining forward momentum in the months ahead.

About the Wells-Fargo Small Business Index

Since August 2003, the Wells Fargo/Gallup Small Business Index has surveyed small-business owners on current and future perceptions of their business financial situation.

Survey Methods

Results for the total dataset are based on telephone interviews with 603 small-business owners, conducted Apr. 2-6, 2012. For results based on the total sample of small-business owners, one can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points.

Sampling is done on an RDD basis using Dun & Bradstreet sampling of small businesses having $20 million or less of sales or revenues. The data are weighted to be representative of U.S. small businesses within this size range nationwide.

Interviews are conducted with respondents on landline telephones and cellular phones, with interviews conducted in Spanish for respondents who are primarily Spanish-speaking. Each sample includes a minimum quota of 400 cell phone respondents and 600 landline respondents per 1,000 national adults, with additional minimum quotas among landline respondents by region. Landline telephone numbers are chosen at random among listed telephone numbers. Cell phone numbers are selected using random-digit-dial methods. Landline respondents are chosen at random within each household on the basis of which member had the most recent birthday.

Samples are weighted by gender, age, race, Hispanic ethnicity, education, region, adults in the household, and phone status (cell phone only/landline only/both, cell phone mostly, and having an unlisted landline number). Demographic weighting targets are based on the March 2011 Current Population Survey figures for the aged 18 and older non-institutionalized population living in U.S. telephone households. All reported margins of sampling error include the computed design effects for weighting and sample design.

In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

For more details on Gallup's polling methodology, visit

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