How Can We Create More American Jobs If We Cannot Get Small Business Loans?
A new article on MSNBC.com states that new federal data show that the number of small bank loans to business has fallen to the lowest point in more than a decade, cutting the flow of money to a sector that’s usually a job-creation powerhouse.
“It’s usually the smaller business that is more able to bounce back and take advantage of different opportunities faster than a middle-market company,” said Linda O’Connell, manager of small business research at Barlow Research Associates, a Minneapolis market research firm that focuses on the financial industries. “We haven’t seen that.”
An analysis of recently released Federal Deposit Insurance Corp. data by the Investigative Reporting Workshop shows that overall commercial and industrial lending by banks has increased for five straight quarters, but small loans to business of $1 million or less have been shrinking consistently since June 2008. As of Sept. 30, total outstanding loan volume was down 14.7 percent from its peak.
“As a small business owner myself, I see that tightening of credit for my peers to be an area of concern for the growth of jobs”, says Robert Piller, Principal of BuyUSPromos.com
The MSNBC article states that a reduction of bank credit has had an even bigger impact on small business than it would on large business, which can borrow money through corporate bonds and “commercial paper.” In contrast, small businesses rely almost exclusively on credit provided from banks.
I agree with the assessment stated int he article that the numbers are especially troubling because businesses with fewer than 500 employees created 65 percent of the jobs between 1993 and 2009, according to the Small Business Administration. But in a November survey conducted by the National Federation of Independent Businesses, a small business advocacy group, only 7 percent said the next three months would be a “good time to expand.”
This economy is not going to get stronger by more Federal spending. Corporate America seems to be hoarding cash these days with little incentive to hire within.
It is for the true job creators, small business to become a more vocal constituency, if the US economy is to thrive in the coming years.
Politicians, what are your stances on helping small businesses to have increased access to finance?
This should be one of your top priorities.
As the saying goes,”a rising tide lifts all boats”. If small businesses can get access to capital for expansion, the economy will grow, more people will get hired and deficits wil decrease.
The math is simple.
Can politicians add?
Support American jobs. The job you save may be your own.