A new study released Monday by the Federal Reserve Bank of New York showed that the majority of Puerto Rico’s small businesses both in and outside the San Juan metropolitan area have few employees and annual revenues under $250,000, among other similarities.
According to the “Regional Perspectives on Puerto Rico Small Business Report,” which segments data into two areas broadly constructed by geographical proximity — the Puerto Rico North Central Metro area (PR-NCM) and the rest of Puerto Rico — those firms in the PR-NMC area are generally older and less profitable.
The report’s findings also show that:
- Credit Demand and Outcomes: Both regions had similar credit application rates and reasons for applying, but PR-NCM firms tended to request higher funding amounts and were less likely to be approved for funding.
- Partial Funding Shortfalls: PR-NCM firms that were partially funded primarily cited insufficient collateral as the reason, while firms in the rest of Puerto Rico pointed to their type of industry, insufficient credit history and low credit scores as obstacles. Many firms in both regions responded to credit shortfalls by using personal resources.
- Zero Funding Responses: Many PR-NCM firms that were denied credit decided to delay or pass on business opportunities, while firms in the rest of Puerto Rico were generally split between this tactic and turning to personal resources.
- Training and Growth Needs: These needs were similar for firms in both geographic regions — specifically citing the need for training focused on increasing sales and improved access to capital and credit.
The report released Monday looks at the aggregate data the New York Fed presented in its inaugural “Puerto Rico Small Business Survey Report” released in November 2016. Both reports focus on the business performance, financing needs and borrowing experiences of small firms across the island.
Both reports were designed by the New York Fed with input from partners in Puerto Rico, and are modeled after the U.S. mainland “Small Business Credit Survey.”
“The Regional Perspectives Report is unique because it segments the overall survey to compare the demographics and financing experiences of small businesses in different areas of Puerto Rico,” the agency said in a statement issued Monday.
“This report contributes to the New York Fed’s ongoing efforts to understand U.S. small businesses and inform actions to strengthen the economy in Puerto Rico,” the regulator said.
The “Puerto Rico Small Business Survey” was issued as a pilot in 2016 and collects information about small businesses, defined as firms with fewer than 500 employees.
The results released Monday come from a survey conducted throughout early 2016 that analyzed responses from more than 750 small businesses in Puerto Rico.
The questions address three major topic areas: firm demographics and performance; demand for credit and outcomes; and top ranked training and business growth needs. A broad network of Puerto Rico business and community organizations partnered with the New York Fed to design and implement the survey.