WASHINGTON - Many small-business owners have stopped borrowing according to a survey released last week by the National Federation of Independent Business.

Rates are low and credit availability remained unchanged from the quarter that ended April 30, according to the report, which covered the fiscal quarter ending July 31. But just 34% of the 2,200 small-business owners contacted said they had applied for a loan during the survey period.

That was down a percentage point from the previous quarter and just one point above the record low in borrowing recorded, last October.

"Even with steadily dropping interest rates, small-business owners have been shying away from credit markets due to the weak economy," the survey's authors said.

The advocacy group found that while sales are creeping upward and inflation is in check, small-business owners are skeptical about growth.

Credit Problems Minimal

Among the few bright spots for small firms in recent months have been credit conditions, the study found. Only 4% of those contacted cited credit problems as among the key difficulties their businesses face. Thirty-seven percent said getting credit was a significant problem a decade ago.

And in the past three months, the survey found, credit availability has remained stable, with 21 % reporting no change in loan availability and 10% saying loans were harder to get.

The survey results square with what bankers have been saying for months, said Ed Allwood of the American Bankers Association. Business owners get their signals from consumers, he said. Until consumer demand picks up, small businesses will be reluctant to seek new loans for expansion.

"We have adequate money out there, for sure," Mr. Allwood said. "When [small businesses] do come back to the window for loans, there should be ample supply."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.