On the surface, last month’s economic indicators introduce a dose of positivity into the market: the private sector added 200,000 jobs and the unemployment rate dropped to 8.5 percent, its lowest point since February 2009. But take a closer look and you’ll see that small businesses are still struggling to catch up, as tight access to credit continues to hinder business expansion. The precipitous drop in home prices has made it very difficult for small businesses to use home equity mortgages as a source of business credit, making them more heavily reliant on banks for private capital.
Making matters worse, 60 percent of small business bank loan applications were denied in 2011, leaving small businesses with few options for expansion and job creation. Yet, the outlook for small businesses appears mixed. A National Federation of Independent Business’ November survey reported its best results in years, finding 24 percent of small business owners were planning capital expenditures and only 7 percent planning to hire. With small businesses normally accounting for 60 percent of new jobs in the economic recovery, improving access to private capital is the key to a sustainable and robust economic recovery.
To read our entire piece, published in The Hill Congressional Blog, click the online link here