Study: More Small Businesses Shut Out of Credit Markets
A new study produced by the National Federation of Independent Small Business on Credit Access reveals that even while the slow economic recovery sent demand for credit on an upward trajectory in 2011, the real estate overhang continues to depress small business growth and curb capacity to borrow.
The report notes that in 2011, the number of small employers obtaining credit from financial institutions was approximately the same as the two years prior. However, demand for credit increased in 2011, meaning more small employers were shut out of the credit market than in prior years.
“The many fruitless attempts by policymakers to understand and improve the credit market for small businesses are due to the fact that they have thus far failed to adequately address the root causes of the economic crisis – lost confidence and uncertainty, and the housing crisis,” said William J. Dennis, NFIB senior research fellow and report author. “The real estate situation has been the elephant in the room since the onset of the Great Recession and remains a substantial variable in the current plight of small business. Washington has responded by doing just enough to be dangerous, but far too little to have any long-term positive impact. Until a workable solution is implemented, we can only expect glacial economic improvement from the small-business sector. It is not a good time to be optimistic, but small-business owners by nature seem to be.”
Other notable survey findings include:
To read the NFIB Study on Credit Access, click here.