63 Percent of Small Businesses Had Outstanding Debt in 2015

Nearly half of small businesses operating at a loss or only breaking even

BY:

A majority of small businesses—63 percent—had outstanding debt in 2015, according to a report from the Federal Bank of New York.

The report collected data from 3,459 small businesses, a group that included startups, microbusinesses, and growing firms, to evaluate business owners’ perspective on their economic outlook and credit environment.

The percentage of small businesses with outstanding debt increased in 2015 by 50 percent from the previous year.

In 2014, the small business credit survey, which took data from 10 states in the eastern region, found that 42 percent of small businesses had outstanding debt. The 2015 survey, which took data from 26 states, found that number increased to 63 percent—a 50 percent increase.

Of those firms with outstanding debt, 54 percent had debt of less than $100,000. Forty-six percent of small businesses had debt exceeding $100,000 with 9 percent of those businesses having debt of $1,000,000 or more.

Overall, while 55 percent of businesses said they turned a profit at the end of 2014, 24 percent took a loss and 21 percent broke even. Younger firms, those at inception to two years old, had more difficulty, as 52 percent reported that they operated at a loss, 18 percent broke even and only 30 percent turned a profit.

A majority of small businesses reported no change in employment in 2015, while 34 percent said they had increased the number of their employees and 14 percent eliminated jobs. Forty-five percent of small businesses said they would increase the number of jobs in the next year, while 7 percent said they would eliminate jobs.

“What’s needed in addition to offline and online credit and equity opportunities for small businesses is an economy in which small businesses can thrive,” said Raymond Keating, chief economist for the Small Business and Entrepreneurship Council. “Unfortunately, the economy of the past eight years, dominated by recession, a dismal recovery, and costly federal policymaking, has been one where too many small businesses simply have to work to survive.”

“Policies encouraging entrepreneurship and small business growth—for example, tax relief and reform and regulatory restraint—would significantly change this dynamic,” he said.

Ali Meyer

Ali Meyer   Email Ali | Full Bio | RSS
Ali Meyer is a staff writer with the Washington Free Beacon covering economic issues that expose government waste, fraud, and abuse. Prior to the Free Beacon, she was a multimedia reporter with CNSNews.com where her work appeared on outlets such as Drudge Report and Fox News. She also interned with the Heritage Foundation and Pacific Research Institute. Her Twitter handle is @DJAliMeyer, and her email address is meyer@freebeacon.com.

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