In his column in today’s New York Times about the Obama Administration’s financial rescue plan, which is being sold, in part, as a way to fix the markets for small-business lending, David Leonhardt asks a rhetorical question: “Do you know many people who want a loan and can’t get one?” His answer: “Probably not… Indeed, if you try to come up with a single prominent victim of the credit squeeze on Main Street—as opposed to victims of the recession—you will have a hard time.”
He goes on to use the rental car industry as an example to illustrate the biggest problem facing most businesses right now: it’s not access to credit; it’s slipping sales. A car rental company simply isn’t going to buy more cars if rentals are down. Leonhardt also argues that most small businesses are “afraid to be identified publicly as a spurned borrower. Instead, they are quietly cobbling together loans any way they can and hoping the squeeze eases soon.”
The latest National Federation of Independent Business survey (conducted in Feb. with 864 respondents) supports that thesis. In their summary about the state of credit markets, the authors write: “As the economy weakens, loan demand fades as fewer capital projects are planned and inventory investment falls. Thirty-six percent reported regular borrowing, up one point from January—typical of the past 20 years.”
In a poll that accompanies our ongoing coverage of Obama’s plans to spur lending to small businesses, we asked readers if their companies would benefit significantly from improved access to credit in 2009. A little over 40% have indicated that’s not the case, so far.
What about your company? Let us know by completing the poll or posting a comment below.