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WASHINGTON (MarketWatch) — Roughly half the small businesses that apply for credit are turned down, according to a report released Monday.
The study was conducted by the Federal Reserve Bank of New York during June and July of 426 small-business owners. It found 59% of small businesses wanted credit, and half of those were denied.
In addition to the small businesses that got none of what they sought, about 75% of those surveyed said they received “some” or “none” of the credit they wanted.
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“Until now, we’ve only heard anecdotally about difficulties for regional small businesses in obtaining credit without any numbers to confirm this,” said Kausar Hamdani, senior vice president and community affairs officer at the New York Fed.
“A main purpose of this poll was to hear directly from small businesses about their recent credit experiences and to analyze them systematically in order to learn more about where the largest obstacles exist.”
The New York Fed also reported that more than two-thirds of the businesses that were surveyed saw their revenues decline.
In the report, a small business was defined as privately owned, with 500 or fewer employees and less than $25 million in revenue.
Some banks, which face growing pressure to increase credit, have argued that they seek to lend to small businesses but there is a lack of interest in borrowing because of concerns about the economy.