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Thursday, May 10, 2012

Latest Report on Small Business Credit

Access to credit has been a tough issue for many small businesses for nearly four years now. Credit issues, along with a host of costs and uncertainties on the policy front, have played key roles in our long economic troubles.

So, what are small businesses expecting on credit as they look ahead?

The Wells Fargo/Gallup Small Business Index, with the latest edition out on April 30, pointed to general small business optimism being at the highest level since July 2008. At the same time, the small business optimism index level still remained at a fraction of the levels registered in, for example, late 2006.

But what about the credit issue? The survey asked about both current and future expectations on credit.

On the question – “Over the past 12 months, how difficult or easy was it for your company to obtain credit when you needed it?” – 30 percent of small business owners said is was very/somewhat difficult, with 22 percent saying very/somewhat easy. That 30 percent is a slight improvement compared to the last two-plus years, but still far above the levels that prevailed prior to late 2008.

Looking ahead – “Over the next 12 months, how difficult or easy do you think it will be for your company to obtain credit when you need it?” – expectations improved compared to where the outlook was over the past three years. Thirty-two percent said very/somewhat difficult compared to 25 percent saying very/somewhat easy.

To sum up, small business owners are still not in an optimistic position on credit. Instead, they’re less pessimistic than where they have been. That is, the outlook is improving, but remains negative.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is “Chuck” vs. the Business World: Business Tips on TV.

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