Are Small Businesses Still Struggling for Credit?

There's an ugly outlook for U.S. unemployment: The Federal Reserve is projecting an unemployment rate of 9.1% to 9.5% for the end of this year, and 8.1% to 8.5% by the end of 2011.

Much of that will come down to small businesses, which form the backbone of our nation, and are key to the economic recovery. Half of the people in America own or work for a small business. Small businesses have created 64% of new jobs over the last 15 years, but they have cut 5 million of the 8 million jobs slashed in total since the credit crisis began. A lack of credit for small businesses could put a lid on job creation and sap the strength of the economic recovery.

As the financial regulatory reform bill makes its way through the homestretch in the Senate, so many are focused on the fate of the big banks. But small businesses are watching closely to make sure their access to credit isn't compromised. To get a better understanding of the state of small business in America, I sat down with Karen Mills, Administrator of the Small Business Administration.

Mills said the recovery is under way, with small business in a better place now than a year ago, and the SBA's loan guarantees are back up to pre-crisis levels -- but that there's still work to do. She also said the U.S. needs to ensure that small business has continued access to credit to sustain business activity and, in turn, job creation. Watch the video here:

Coming tomorrow on Fool.com: Karen Mills' thoughts on the future of innovation in America.

Fool contributor Jennifer Schonberger does not own shares of any of the companies mentioned in this article. You can follow her on Twitter. The Motley Fool has a disclosure policy.


Read/Post Comments (8) | Recommend This Article (19)

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  • Report this Comment On June 02, 2010, at 4:39 PM, beerman53 wrote:

    same story different admin

    the small business get the crumbs if they can jump through hoops that are deigned to trip you.

  • Report this Comment On June 02, 2010, at 7:14 PM, LibraFool wrote:

    First off, given Karen Mills' academic credentials and "street cred" in prestigious entrepreneurial circles [http://bit.ly/KarenMillsSBA], small businesses are very fortunate that she's serving the public good at SBA's helm.

    Since Mills' appointment just over one year ago, she's already made significant strides in helping small businesses access working capital -- all the while, delivering an unprecedented degree of transparency in SBA's reporting.

    Kari Larson

    Editor & Publisher, GoodBiz113

    Web: http://goodbiz113.blogspot.com

    Twitter: @GoodBiz113

  • Report this Comment On June 02, 2010, at 8:26 PM, xetn wrote:

    What impact do you think MaobamaCare will have on small business hiring? How about Cap N Trade if it gets passed? How about taxes? Just asking.

  • Report this Comment On June 02, 2010, at 8:38 PM, topsecret10 wrote:

    WHAT CREDIT ??????? Banks don't even trust each other any more,why should they trust a small business person ??

  • Report this Comment On June 02, 2010, at 11:51 PM, thidmark wrote:

    Nice interview, but that crooked lampshade was driving me crazy :)

  • Report this Comment On June 02, 2010, at 11:57 PM, thidmark wrote:

    Nice interview, but that crooked lampshade was driving me crazy :)

  • Report this Comment On June 03, 2010, at 4:41 PM, Big50Shooter wrote:

    To answer the titles question:

    *#$%*@#!&! YES!!!

    Let me tell you what happened to my "small business" in Jan. of this year. We had a $200,000+ line of credit for the last 14 or more years with various banks, which subsequently were bought/sold and the final ownership ended up being with BoA. This "note" has a maturity date at the beginnng of the year, and normally we submit our financials to the bank @Oct./Nov. and since we are usually very "solid" (we have been family owned/operated since 1924!), we usually get renewed every year. This last year was one of our first dealings with BoA however.

    Well, we are in the Detroit area, and we are in a construction related industry, so of course, considering the BS that the Big 3 have gone through in the last couple of years, certainly our sales have suffered. But, we have always remained in the black, have NEVER missed a loan payment in ALL the years we have had the line, and we rarely even had the line "maxed out" for more than a month or two in the ENTIRE history of the note.

    Well, we conference call with the local BOA rep. & some dufus BoA rep out of N.Y. last Nov. to go over our application/financials/renewal process. During this call, the brain surgeon in N.Y. asks; "Why have your sales gone down over the last year or two?". To wit, even the local BoA rep said: "Uh Allen (the N.Y. dufus' name) you HAVE heard about GM & Chrysler going bankrupt right? Chrysler financial is 2 miles away from this clients warehouse, GM's HQ is less than 30 miles away. Since these 2 companies alone account for a HUGE portion of ALL business in this area, do you think that maybe THIS has something to do with their declining sales?".

    I am sure glad that the local guy stepped in first, because I was about to let loose on "Allen" and remind him that WE (us and the U.S. taxpayer) had just BAILED BoA's A$$ OUT to the tune of BILLIONS for the STUPID things THEY did!...

    Well, January comes around and we get a letter from BoA: Your $200,000+ note is DUE IN FULL on Jan.8, 2010. Thank you for your business.......

    Of course many of you will remember that shortly thereafter, with all the pomp & circumstance of the next coming of the Almightly himself, BoA announced that it was repaying all of its' bailout funds to the federal gov, ahead of schedule!!! You wonder where they came up with the $$$, you can thank ME and HUNDREDS/probably THOUSANDS of other small business' that took it on the nose in the days preceeding that glorious announcement....

    BTW, BoA also holds the note on our warehouse/offices, the 5 yr ballon for which comes due in another year or two... When they screwed us on our line of credit, they said they'd be happy to keep our building note (SURE! Because we have paid-ahead when we could and we now have more equity in that note than what the building is now probably worth as a whole, IF we were able to find a buyer anyway! Aren't they "caring"!?!).

    Since then, we still don't have another line of credit, even the small banks won't pull that trigger. Since BoA screwed us, and since interest rates have fallen, we also are searching for a new bank to hold the note on our building (trying to find a smaller bank; SCREW the Big Ones!), but even that is proving to be a royal pain in the a$$ around here...

    Where are MY "TARP Funds"? Where is MY "bailout"? I didn't even do anything STUPID like the big banks did!

    I bet that "Allen" dumba$$ made a few hundred thousand bucks last year, and he obviously doesn't even have a grasp of reality, or at least he doesn't know how to show it if he does....

  • Report this Comment On June 11, 2010, at 2:39 PM, FlyBoyRDJ wrote:

    I feel for you Big50Shooter. I've dealt with them before as well. BoA has the biggest crooks and idiots out there, and the fact they got bailed out at taxpayer expense is a travesty. As another small business owner I refuse to have anything to do with that company. I'm actually hoping to see it go belly-up in round 2 of the housing crisis, which I suspect is coming soon.

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