It seems that most of the economists know that our economic engine for employment is our small businesses. Unfortunately, after the “too big to fail” Wall Street bailouts of all of the banks, the small business community didn’t get the juice it needed. Our smaller firms did not get the money they needed to borrow to stay in the game during the economic recession. Now that the recession has lingered far too long, and unemployment rates are going back up companies are not interested in borrowing money, even though it is now available.This presents several problems. First, if small businesses aren’t expanding, and new business startups aren’t occurring, then we cannot have job growth in the small business sector. Since 60 to 70% of our population is employed by smaller firms, without the help of the small business community we are stuck, without a direction to move in.An interesting article in this regard was published on MSN Business News on the last day of June 2011 titled “U.S. small business borrowing surges” by Ann Saphir which attempted to put a really nice little spin on things as it stated;”Borrowing by small U.S. businesses rose at a record pace in May, data released by PayNet Inc.,” and “overall volume of financing to U.S. small businesses, rose 26 percent in May from a year earlier. The index is now at its highest since July 2008, two months before the collapse of Lehman Brothers and the near derailment of the world financial system. Dallas Fed President Richard Fisher on Tuesday said he expects 4 percent growth in the second half, more than twice the 1.9 percent pace in the first quarter.”As a former franchisor, I realize that when new businesses start, they have to hire people and employees. If new businesses don’t start, then obviously they aren’t around to hire anybody. Each time my company set up a new franchise, that franchisee would immediately have to go out and hire four or five people. Our existing franchisees as they expanded and got new contracts and increased their customer base they had to hire another five people, and so on.That’s how it works, the only problem is that the percentage of smaller companies that are willing to expand isn’t moving forward fast enough to accelerate our economy. As things move forward, albeit slower, and more credit becomes available that’s a start, but it’s not only the available credit that matters, it is the number of small business wishing to take out loans for expansion, or startups. Indeed I hope you will please consider all this and think on it.
Commercial Loans – Small Business Borrowing and Economic Data Considered
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