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One in four small businesses lack financing: NSBA report
WASHINGTON (2/8/13)--Financing markets for small businesses are starting to thaw, with 73% of small businesses surveyed reporting the ability to gain financing, the highest in four years. However, one in four small businesses still can't get financing for their capital business needs, said the National Small Business Association (NSBA).

NSBA's 2012 Year-End Economic Survey piles on another log in the stack of reasons why credit unions--which loaned to small businesses through the recession when banks abandoned them--are seeking legislation to allow them to continue providing more small-business loans, said the Credit Union National Association.

CUNA and credit unions are urging Congress to raise credit unions' member business lending (MBL) cap to 27.5% of total assets, up from the current 12.25%.  Doing so would generate $13 billion available for MBLs--and increase jobs by 140,000 in the first year without costing the taxpayer.  Enhancing credit unions' charter to include increased MBL authority is one of CUNA's top 10 priorities for 2013 (News Now Jan. 3).

Using data from as far back as 1993, NSBA has found a "clear correlation to a small-business owner's ability to hire and his/her ability to get financing.  While the last four years have seen a small-business community struggling to stay afloat, we also have seen their ability to get capital diminish."

The study indicates small businesses are less optimistic about their outlook and the U.S. economy than a year ago. "Despite modest gains in the number of small businesses projecting U.S. economic expansion, the overwhelming majority--86%--still believe the U.S. economy will be flat or recessionary in the coming year," said SNBA President/CEO Todd McCracken. "Half of all small businesses project no growth whatsoever in their own business year," he added.

However, the survey's timing --conducted during the fiscal cliff debates--could have lowered optimism, said NSBA.

Other findings:

  • Thirty-eight percent of those surveyed expect to grow in the coming year--the lowest indication since researchers began asking the question in December 2009;
  • Hiring remains stagnant, with 16% of those surveyed projecting decreases in employment size in the next, up from 12%;
  • Economic uncertainty is the No. 1 challenge facing small-business owners, followed by regulatory burdens and health care costs; and
  • Reducing the national deficit is the No. 1 thing small business owners want from Congress.
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