More Concerned About Falling Sales Than Access to Credit

Despite ongoing alarms about the credit crunch, small business owners are actually more concerned about sales than they are about access to credit. That’s according to a recent National Federation of Independent Business survey on the impact of the nation’s financial problems on small business.

The survey of 750 employers with fewer than 250 employees shows 45% of respondents cite slowing or lost sales as their company’s most important immediate problem, 23% cite unpredictability of business conditions, 9% cite falling real estate values, 9% cite the cost and/or terms of credit, and 8.9% cite an ability to obtain credit.

At the end of the report (p. 13) there are a few suggestions directed at policymakers:

Efforts to make additional capital available to small business through directed(encouraged) bank lending or indirectly through government guaranteed lending is not likely to be generally helpful. Unless there is a plan to massively subsidize those loans, firms who most often want credit and cannot now get it are high risk and typically not able to absorb additional debt with reasonable prospects of repaying it. Such action simply saves a few while condemning others to worse circumstances than they otherwise would have encountered, leaving a third party to hold the debt.

The policy response lies elsewhere, in efforts to stimulate the economy in order to instill confidence and generate sales, thereby improving balance sheets and reducing the need to borrow…

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