Small Businesses Struggle to Find Financing: NSBA
Despite a rescue of struggling lender CIT Group and millions in economic stimulus funds, small businesses are still having trouble finding financing, according to a report from the National Small Business Association.
According to the group's mid-year economic report, 80 percent of small businesses are unable to obtain adequate financing, and 75 percent have yet to realize any benefit from the economic stimulus.
"The reality is most of the stimulus money that was actually directed at small business was focused on lending," said Todd McCracken, president and CEO of the NSBA. "So they heard all this stuff in the first quarter about how we're going to get more lending out to small companies, but they're not seeing it." (See the full interview above)
According to the report, released Wednesday, revenue for small businesses has decreased significantly since last year, with only about one company posting an increase in revenue for every three reporting a decrease.
And as home prices continue to decline, it's increasingly difficult for businesses that are just starting up and need to use their homes as collateral for financing.
"[People starting new businesses] usually lead us out of these recessions. They see opportunity in these tough economic times and help us grow out of this," McCracken said. "We're a little bit worried that's not going to happen like it usually does."
One positive found in the report is that small businesses have improved their economic outlooks. Only 42 percent anticipate a recession over the next 12 months, versus 64 percent who forecast a recession in December 2008. Similarly, 51 percent forecast a flat economy, while only 33 percent predicted stability in December 2008.
CIT , a lender to many mid- and small-sized businesses, mapped out a restructuring plan earlier this week that, if successful, may save the company from a bankruptcy filing.