Report Outlines Small Businesses’ Credit Woes, Possible Solutions
Small business owners create the majority of new jobs in this country, but are still struggling to play their role as our primary job creators due to a lack of access to credit – something proposed legislation that would expand credit unions’ ability to lend to their members could help, according to a report released today by the R Street Institute and Small Business Majority.
The report reviews challenges small businesses face in obtaining credit and outlines potential benefits the bipartisan legislation could have on their ability to access much-needed loans. The proposals currently on the table in Congress would allow credit unions to lend as much as 27.5 percent of their assets, up from 12.25 percent, and would free up $13 billion in capital and create 140,000 jobs, according to the paper.
“The current restrictions on credit union business lending are anti-small business and anti-jobs. Simple regulatory relief for credit unions will create thousands of new jobs at no cost to taxpayers,” said Eli Lehrer, president of the R Street Institute and author of the paper. “Expanded credit union lending to small businesses is exactly the medicine the economy needs right now. “
The vast majority of small business owners agree the availability of credit is a problem for small businesses, according to opinion polling released by Small Business Majority. Six in 10 small business owners polled said it’s harder to get a loan now than it was four years ago and another 60 percent have faced difficulty themselves when trying to access loans so they could grow and hire. What’s more, 52 percent of those surveyed have turned to credit cards to finance their business.
However, by a 2:1 ratio, small businesses support increasing credit unions’ member business lending cap to 27.5 percent.
“Loans that will help small businesses grow and create jobs are harder and harder to come by,” said John Arensmeyer, founder and CEO of Small Business Majority. “With banks’ lending portfolios shrinking and small businesses’ dependence on credit cards growing, lawmakers need to look for smart ways to revamp the credit landscape.”
To read the full report visit http://rstreet.org/policy-study/small-business-credit-still-a-problem” target=”_blank”> http://smallbusinessmajority.org/small-business-research/access-to-credit/ or http://rstreet.org/policy-study/small-business-credit-still-a-problem.