The NFIB Research Foundation just released the new report “Small Business Credit in a Deep Recession.” The bottom line to these findings show that although obtaining credit has become more difficult, declining sales and depressed real estate values lie at the base of credit problems. See the results below:

55 percent of small employers attempted to borrow in 2009
45 percent did not attempt to borrow in 2009
5 percent of owners, did not try because they did not think they could obtain credit.
40 percent of small business owners attempted to borrow in 2009 had all of their credit needs met
10 percent had most of their needs met
21 percent had some of their needs met
23 percent had none of their credit needs met.

It was reported that the most frequent change was increased interest rates, and the most common planned purpose of credit rejected was to fill cash flow needs.

Real estate ownership is a major reason why small businesses have not yet started to recover, and why larger companies have been able to recover more quickly than smaller businesses.
That means current small business problems will not be solved by simply focusing on lending issues. Policymakers need to also focus on weak demand and real estate.

In the meantime, small businesses can work withing the perameters of accounts receivable factoring to survive. Construction factoring is up, and continues to support the general contractors and builders.
Tackling weak demand requires growth in the economy, not more liquidity in financial markets.