The State of Small Business Credit

by Dan Lacy - June 20th, 2012

Last week we completed session seven of the Profit Make Simple workshop and we discussed The Power of Profit In Financing. We have a remarkable class this session and the classic question came up: what is the status of small business lending in Indiana today?

There were two great articles about this subject this week, one in the NFIB’s publication, My Business, on page 16 titled The Small Business Credit Conundrum and another one in the June 19th Wall Street Journal, front page article: Fed Wrestles With How Best To Bridge U.S. Credit Divide.

Nearly all banks are lending to businesses with strong balance sheets and excellent earnings. Businesses with great finances can get great rates and what they need to borrow, that is about 20% – 25% of the businesses in America. The balance of businesses, it is a hit or miss process. NFIB reported that 600,000 businesses were turned down for credit and 800,000 didn’t get the amount of credit they requested in 2011. More business owners are having to rely on their own personal credit cards to fund purchases, measuring 49% in 2011 versus 42% in 2009.

Congress, the administration, the Fed, the FDIC, and the Controller of the Currency
are making it more difficult for banks to make loans; there are too many controls
to protect the tax payer (no pun intended). Smaller banks are struggling with the
addition of more and more regulations which results in expensive paper work to keep
up with them. The banking industry and the economy were much better off 25 years
ago when there was less interference from regulators and Congress.

Dan Lacy
Growth & Profit Coach, Financial Strategist, Cash Flow Doctor, CEO Mentor
phone: 765-644-8887

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