Credit for small businesses? A tough sell if you're a business person looking for that expansion capital, (if there is such a thing), or money for whatever needs there are.
The phrase uttered by the Fed that, "Data seems to suggest that current economic conditions for small businesses are less dire than they were in 2009." Really? The Fed contends that there is weak demand from businesses and banks tightening the screws make lending tight.
The "bright" point is that the Fed says bank lending practices and standards stopped tightening in the first quarter of 2010. Business owners and groups that represent them certainly haven't seen lenders becoming lenient.
Enter no less than Ben Bernanke, Fed Chairman. "The formation and growth of small businesses depend critically to access to credit," he stated.
"Unfortunately, those businesses report that credit conditions remain very difficult," Benanke continued. A closer look at the actual dollars loaned reveals that in the second quarter of 2008, $710 billion was loaned compared to only $670 billion in the first quarter of 2010.
Some may scoff at the notion that banks are there to loan money as that's how they make money. We contend that many small firms are sitting on cash and afraid to invest in an uncertain economy.
While those lucky few that do have hoards of cash and can afford to wait it out, there are legions of small businesses that don't have that luxury and are in dire need of capital infusion.
The paradigm is shifting and firms are now having to look for equity partners and the small business person will have to bring in outsiders as their new partners. The rich may be in line to get richer by taking business risks, and that's a tough sell. The banks are no help and the business type of today can expect no longer as its "business as usual," but unusual business that is based on uncertainty both economically and politically.