May 13 (Bloomberg) -- The Federal Reserve Bank of New York said tight credit restrained the growth plans of many small businesses in 2012, citing a survey of lending in its district conducted in March and April.
“The ability to access credit remains a widespread growth challenge for small businesses in the region, even among profitable firms,” the New York Fed said in its Small Business Credit Survey released today.
The bi-annual survey found that 49 percent of small businesses identified the difficulty getting credit as “a barrier to growth,” according to the survey of 812 small businesses in New York, New Jersey, and Connecticut. Among firms operating at a loss, 66 percent had difficulty getting credit, yet even 36 percent of profitable firms were concerned with obtaining credit, the survey found.
The New York Fed’s survey is part of central bank efforts to determine if record low interest rates are spurring credit to small firms that in recent years have lagged behind large firms in generating jobs.
Companies with fewer than 20 workers increased employment by 3.8 percent from February 2010 to April 2013, while large companies -- with more than 1,000 on their payrolls -- expanded their workforces by 8.6 percent, according to data compiled by Moody’s and ADP Research Institute.
The New York Fed’s survey reported that 18 percent of firms “were discouraged and did not apply for credit” compared with 29 percent in 2012. About two-thirds of firms that did not apply for credit “were already sufficiently financed or simply didn’t want to take on more debt,” the survey showed.
The poll asked a series of questions about the recovery from Superstorm Sandy which struck the region in October. The survey said that 61 percent of firms estimated their losses from the storm of less than $25,000, while 13 percent of firms had losses greater than $100,000.
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