Issue #19&20 October-November 2009

The Top 9 from

TheNational Small Business Poll is currently in the field with a new survey designed to obtain the latest data on small business access to credit.  The survey, titled “Small Business Credit in a Deep Recession,” addresses issues of met and unmet credit demand, credit cutbacks, discouraged borrowers, creditworthiness of potential borrowers, and real estate as a drag on borrowing capacity.  It further investigates use and availability of loans, lines, and credit cards, with a brief look at trade credit.  As usual, thePoll is being conducted over a national stratified, random sample of small employers for the NFIB Research Foundation by The Gallup Organization.  Initial results should be available in January.

The business press has carried numerous reports over the last several months of small business owners who wanted to borrow for one business purpose or another and could not.  The tales’ repetition portrays an epidemic-like credit shortage where the inability of small business owners to borrow curtails productive investment which in turn lowers output and employment which in turn reduces consumer spending and confidence, and so forth.  But is that so?  Virtually no empirical data has been available over the last 12 months offering insights into the nature and extent of an access to credit problem.  The Federal Reserve’s Senior Loan Officer Survey and NFIB’sSmall Business Economic Trends are exceptions.  Call report information on loans under $1 million from the FDIC has also been collected (June), but not yet published.  That means for the most part, we have simply speculated from stories.

The lack of data has left the Administration and the Congress, which have shown occasional interest in addressing small business credit access, floundering.  They unfortunately cannot even identify the problem(s), thereby making proposed solutions shots-in-the dark at best.  The same is true of trade groups and others supporting smaller firms.  The result has been wringing of hands and inaction.
A survey cannot solve the current economic problems most small businesses face.  But it can point policy-makers in the right direction.  That would be a pleasant change from the indecisive twisting that currently substitutes for policy.


The NFIB Research Foundation

The TOP 9 Questions for August & September 2009