Monday, July 12, 2010

How Bad are Things for Small Business?

In a speech today, Ben Bernanke tells us:

The formation and growth of small businesses depends critically on access to credit. Unfortunately, conditions remain very difficult. For example, the net percentage of survey respondents telling the National Federation of Independent Business that credit conditions have tightened over the prior three months has remained extremely elevated by historical standards. And one measure of banks' loans to small businesses dropped from more than $710 billion in the second quarter of 2008 to less than $670 billion in the first quarter of 2010. An important but difficult-to-answer question is, How much of this reduction has been driven by weaker demand for loans from small businesses, how much by a deterioration in the financial condition of small businesses during the economic downturn, and how much by restricted credit availability? No doubt all three factors have played a role...

As one business owner at the Detroit meeting I attended put it, "If you thought housing had declined in value, take a look at what equipment is worth." Business owners cited credit lines and working capital as their most critical financial needs, followed by refinancing products that would permit them to take advantage of low interest rates.


  1. Everytime I read something from these lunatics, I have to wonder what they think a small business is.

    The small businesses I know, like the small car wash, the firm supplying hands for concerts and fairs, the pub at the corner, the software development startup, the bakery and the likes do not need hunger credit lines. They need cheap tools (mostly used) and some working space, which can be easily paid with 10000 bucks. What they need the most is protection from government protected mafia gangs.

    But lets be realistic here, to get on the list of the favoured small businesses, deperatly in need for cheap credits, one has to send a little check to the party in power. It's called supporting your politicians, but I would call it a bribe.

  2. Wouldn't any business owner's #1 concern be revenue? Or is that crazy talk?

  3. Move your money out of the TBTFs and into community banks / credit unions.