Smart Borrower Blog

Small Business Loans Are Hard To Come By


Oct 3rd, 2011 @ 11:25 AM by Debbie Dragon


If you own a small business and are looking for funding you probably will find getting a loan is not an easy task. Forbes reports that since small business bank loans peaked in 2007 reaching nearly 2.5 million, they have dropped drastically by about 39%. As of June of 2011 bank loans made to small businesses had dropped to levels not seen since 1999 and at that time there were almost six million less small businesses throughout the country, compared to today.

Why such a decline? The economic downfall is partly to blame, but the Forbes article also points out that it is hard to tell whether loans are down due to banks tightening their lending standards or whether there is just a drop in demand. There is also the possibility that it is a combination of both.

Many economists believe that small business lending helps create jobs and in turn stimulates the economy. So the question is why can’t we get more loans into the hands of small businesses?

While banks have been slow to lend money to small businesses, the SBA (Small Business Administration) has been working hard to help businesses secure SBA loans, but many believe that is still not enough.

While it looks like the economy might be turning a corner, small businesses could potentially play a key role in its continued recovery. This week Karen Mills from the SBA met with house law makers about the efforts that have been made to help get small businesses back up and running. While she thinks there has been progress she still thinks it is not enough. She told law makers:

The job is not nearly done. We’ve made slight progress over the last year, but there is still a very large gap.

During her visit to Capitol Hill Mills also commented on the Obama’s new jobs proposal that has met much opposition. Mills said that the bill is receiving positive feedback from the small business community as it would help them financially by lowering the cost of payroll taxes. Mills said:

Small businesses are looking for that cash from the payroll tax cut in their pocket.

Not too many people would argue that more needs to be done to help small businesses in hopes that they can help to create new jobs and at the same time stimulate the economy.

 

About Debbie Dragon
Debbie Dragon is a full time freelance writer and the co-owner of ReliableWriters.com.

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