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:

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.