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While most small businesses were satisfied with the support they received from small banks during the pandemic, businesses using online lenders as their primary financial institution were more likely to report dissatisfaction, according to a recent survey by the Federal Reserve Banks.

The Small Business Credit Survey (SBCS), an annual collaboration of the 12 Federal Reserve Banks, found that most small businesses sought emergency lending during the pandemic.

The survey found that 91 percent of small businesses applied for some type of emergency funding, with 82 percent applying for the PPP and 77 percent of the PPP applicants receiving all of the funding they sought. Only 4 percent of respondents that applied for PPP did not receive any funding.

Conducted in September and October 2020, the survey included responses from approximately 9,700 firms nationwide with 1-499 full-or part-time employees in all 50 states and Washington, D.C. The firms analyzed were currently operating or temporarily closed at the time of survey. Permanently closed businesses were not included in the survey.

Only 2 percent of respondents said they used a community development financial institution as their primary financial services provider, but these respondents were most satisfied with the support they received during the pandemic, with 70 percent responding that they were satisfied and 12 percent dissatisfied.

Most of the firms using small banks were also satisfied with support during the pandemic. The survey found that 45 percent of respondents used a small bank with less than $10 billion in assets as their primary financial institution, and 61 percent were satisfied with the support received, while 11 percent were dissatisfied. The rest had a neutral response.

Large banks were used by 49 percent of respondents, and 41 percent were satisfied with the support received, while 24 percent were dissatisfied. Online lenders had the lowest satisfaction rating. The survey found that 11 percent of respondents had an online lender as their primary financial services provider, and only 18 percent of those respondents were satisfied with the support. Another 42 percent were dissatisfied with these lenders.

In addition to pandemic-related funding programs, the survey also found that 37 percent of small businesses applied for other financing, including loans, lines of credit and cash advances.

Small businesses that used credit unions for this type of financing most satisfied with their lender, followed by those using small banks. For those approved through credit unions, 87 percent were satisfied with their lender, and 81 percent were satisfied with small banks. Only 5 percent of those who received funding from credit unions and 7 percent from small banks said they were dissatisfied. For small businesses using large banks, 68 percent were satisfied, and 8 percent were dissatisfied. The rest had a neutral response.

Online lenders again had higher levels of dissatisfaction, with 18 percent of small businesses reporting dissatisfaction with online lenders and 43 percent saying they were satisfied. Another 38 percent had a neutral response to online lenders.