AUGUST 15, 2011, 10:42 AM ET
Survey: Small-Business Demand for Credit Still Soft

Only one third of small businesses in the New York region applied for credit in the first quarter, according to data released Thursday by the Federal Reserve Bank of New York.

The New York Fed’s quarterly Small Business Borrowers Poll suggests small firms still face hurdles to getting credit, and many companies are foregoing new borrowing until their balance sheets improve.

According to the survey, most applicants sought $250,000 or less in credit and applied for working capital rather than investment financing.

More applicants sought new credit products rather than renewing existing credit lines, but renewals had greater success. Overall, bank products were harder to obtain than non-bank financing, the New York Fed found.

The remaining two-thirds of small companies didn’t apply for credit. Among those not applying, 19% said they were paying down existing debt, 21% didn’t need financing and 27% thought they would be turned down.