Small Business Credit Survey Results: Would Local Start-Up and Small Business Funding Increase Downtown Development?

(Illustrative Only)

Jackie is a local
banker and is 
pooling resources
for small businesses
started by young people
on Ludington St. Escanaba,
 allows for lower interest with 
profit agreements, takes different
 forms of collateral, and 
continues to encourage
investors to put 
money into a
community based local
entrepreneurial hedge 
fund. She tries
to hedge the type
of businesses through
clustering so 
they support each other, 
gets people together
for meetings to
share ideas,
and partners with
larger local and 
regional businesses
to sell products
and export internationally
under a local brand
that helps tourism, micro
manufacturing, and local
business development.

Hedge Start Ups,
Availability of Financial Info,
Venture Capitalism,
Interconnectivity of Firms,
Funding Start Ups

The report focuses on small employer firms and their access to business credit. Small businesses often rely on credit to start and grow operations. While some begin with personal savings, many eventually need financing as they expand. Using credit cards is common, but it is not always the most effective or sustainable way to support broader economic development in local communities.

Access to affordable financing—especially through local or community banks—can play an important role in helping small businesses succeed. Lower interest rates or pooled funding options could encourage more business formation and support local economic growth.

The survey suggests that small business conditions are slowing slightly, though not sharply. Growth may continue at a slower pace in the near future. At the same time, many firms are adapting by embracing new technologies, including artificial intelligence. Finance is still seen as a challenge.

About half of small businesses report that their financing needs are fully met, while others still face gaps. There is also a continued rise in the use of online lenders, though these options can sometimes come with higher costs.

Overall, strengthening local financing systems could help support small business development. Even though not all businesses succeed, a strong financing environment increases the chances that some will grow significantly and contribute meaningfully to local economies.

2026 Report on Employer Firms (Small Business Credit Survey)

• Based on the 2025 Small Business Credit Survey, which collected responses from over 6,500 small employer firms (1–499 employees) across the United States
• Revenue and employment growth remained relatively stable year over year, but overall performance is still below pre-pandemic levels
• For the second consecutive year, a higher share of firms reported revenue declines than increases
• Expectations for future revenue and employment growth declined to their lowest levels since 2020
• Approximately 38% of firms reported increased revenue, indicating slower growth compared to prior years
• Nearly half of firms source inputs internationally, and most reported higher input costs compared to 2024
• About 84% of firms relying on foreign inputs experienced cost increases, with many passing costs to customers
• Roughly half of firms had their financing needs fully met, while about one-third experienced a funding gap after applying for credit
• Use of online lenders increased for the fifth consecutive year, though 60% of borrowers reported higher-than-expected costs
• Just under half of firms (around 46%) reported using artificial intelligence, primarily for marketing, productivity, and planning
• A majority of firms using AI reported productivity gains, though most did not see major changes in labor costs

Federal Reserve Banks. (2026). 2026 report on employer firms: Findings from the 2025 Small Business Credit Survey. https://www.fedsmallbusiness.org/reports/survey/2026/2026-report-on-employer-firms