Is tight credit hurting small businesses?

Tight credit continues to hurt small businesses in many ways.   If a small business has gotten through a very difficult economic environment in the last 3 years to the point that they are comfortable acquiring debt for purposes such as expansion, new markets, adding equipment or advertising, the lack of financing significantly reduces their ability to do these things, and consequently greatly suppresses job growth and the economy.

Facilities expansion, adding a presence in additional states, remodeling and upgrading facilities, and advertising all require capital.     When companies look to acquire equipment,  this is frequently a precursor to a job opening for person(s) required to run or use equipment.

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Business problems when credit tightens

  1. Approval requirements go up, so getting approved is more difficult.
  2. Offer amounts are lower
    The lack of available credit to small businesses in the private sector is something government typically cannot influence much, regardless of whether it should or not.

There are no easy solutions to this problem.   At this time, only an improving economy will loosen private credit markets.

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