Philly small business owners are adjusting to the new ‘status quo’

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About 57% of small business owners across the Delaware Valley surveyed by the Federal Reserve of Philadelphia said they weren’t on solid financial ground in 2023.

It’s the second year in a row the majority of small businesses in the region reported fair or poor financial conditions. About 56% reported they were struggling financially in 2022 when surveyed last year.

Each year, the Federal Reserve surveys thousands of small business owners nationwide, including hundreds in the Philadelphia-Camden-Wilmington metro area about revenue, access to credit and other challenges.

“Having a pulse of how small businesses are doing can help get us a pulse of how a lot of the economy is doing,” said Alaina Barca, a community development research analyst with the Federal Reserve of Philadelphia.

The results are “status quo” for small business experiences since the COVID-19 pandemic began more than four years ago, Barca said.

About 63% of small business owners across the metro area did not see an uptick in revenue between 2022 and 2023.

While interest in access to credit remained steady year-over-year, some types of credit were more popular than others. The rates among applicants went up for lines of credit, business loans, personal loans, home equity loans, real estate loans or cash advances in 2023 compared to 2022.

“A third of small businesses in our area are still applying for these products because they often use them to make ends meet, to try and get by to make it into next year where they might do better,” she said.

There was a large drop in loan applications from the U.S. Small Business Administration  — 30% in 2022 compared to 11% in 2023.

The top three financial challenges owners reported facing were increased cost of goods, services and labor, weak sales and operating expenses. Hiring qualified employees, growing sales and issues in the supply chain were the most common operational challenges.

“I do think that generally, they are surviving,” Barca said. “But I think there is some hope in this space, they do seem to be less often reporting that they are experiencing these challenges.”