Small business owners respond to President’s call for small business credit
October 22, 2009
Responding to President Obama’s announcement today of a new initiative to enhance small businesses’ access to affordable capital, SBAM’s national affiliate The National Small Business Association (NSBA) registered support of the administration’s actions, but urged further action.
“The most critical component for small-business owners as they make their way out of a recession is finding the resources to enable them to grow,” stated NSBA President Todd McCracken. “The initiatives and reforms announced today by the administration will be very helpful to many small businesses, and I applaud their efforts. However, more can and must be done.”
The administration’s new initiative includes increased loan caps for SBA lending programs and an infusion of lower-cost capital to community banks, both steps in the right direction. Critical to its success, however, is the timeliness in which the measures are implemented, as well as assurances that any capital provided to community banks will be used for small-business lending—not simply shoring-up their balance sheets.
Since early in 2008, NSBA has been warning of the dire implications of the credit crunch on small business. Particularly now, as the U.S. economy begins to show a few glimmers of hope, small business access to affordable capital is the lynchpin to a rapid and sustainable economic recovery.
Unfortunately, today’s entrepreneurs are severely limited in their ability to finance new businesses through their historical avenues: leveraging the value of their home, borrowing from friends and family, or getting a traditional loan. Compounding matters, the Federal Reserve reported in its July 2009 Senior Loan Officer Opinion Survey that banks continue to tighten standards and terms on all major types of loans to businesses, and expect these tightened standards to remain throughout 2010.
“The overwhelming majority of small-business owners surveyed in July by NSBA—80 percent—have been negatively impacted by the credit crunch,” stated NSBA Chair Keith Ashmus, co-founding partner of Frantz Ward LLP, in Cleveland, Ohio. “The time for action is now.”
An outspoken advocate on the issue, NSBA has developed a comprehensive list of short-term and long-term fixes that will help ease capital markets for small businesses. The proposed fixes are the centerpiece of a new NSBA initiative, Credit NOW, Growth Tomorrow, designed to offer solutions and proposals for ensuring the long-term viability of America’s small businesses.