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Small Businesses Concerned About Banking Crisis, But Few Have Changed Financial Institutions

By Augusta Saraiva

About four in ten US small businesses said they were very or moderately concerned about the health of their bank last month, though very few actually changed banks or even reached out to them in the wake of the finance-industry turmoil in recent weeks.

NEW YORK, US – MAY 1: The troubled First Republic Bank was closed by US regulators, while its assets are to be acquired by JPMorgan Chase, the Federal Deposit Insurance Corporation (FDIC) said Monday in a statement. (Photo by Lokman Vural Elibol/Anadolu Agency via Getty Images)

Most small businesses rely on regional and other small to mid-sized banks for financing — the type of institutions at the heart of concerns about stability since the collapse of Silicon Valley Bank in mid-March. Still, 98% of owners reported that they had not changed their business’s primary financial institution in the last month, according to a National Federation of Independent Business survey out Wednesday.

The survey, which was conducted April 14-18, showed just 7% of owners reached out to their bank about concerns related to the  — though 15% said their bank had reached out to them. Nearly a third of respondents said they were not at all concerned about the health of their bank. 

Small businesses remained largely upbeat about their access to credit. One in four owners borrowed money from a bank or other lender in recent months, and of those who did, more than 90% were at least moderately satisfied with the amount and terms offered. Respondents said they borrowed mainly to meet operating expenses and expand their business.

Nearly three-quarters of owners didn’t apply for any financing in the last three months, and a vast majority said it was because they didn’t need any financing. Only 3% of respondents said they didn’t think their application would be approved.

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