Small Business Credit Remains Tough to Get

The last quarter saw a dip from 34 to 33 percent in the share of small business owners reporting that credit is difficult to get, according to the most recent Wells Fargo Small Business Survey.

Statistically, however, the share of small business owners reporting trouble obtaining credit has been the same since the third quarter of 2009. The survey, which is based on a nationally representative sample of 600 small business owners whose companies have up to $20 million in annual sales, has a margin of error of plus or minus 4 percentage points.

In the figure below, I have plotted the fraction of small business owners reporting that credit was difficult to obtain for each quarter since April 2007. The figure clearly shows three distinct periods in small business owners? perceptions of credit availability: Before the recession, when only a small fraction thought credit was difficult to obtain; during the recession, when the share expressing this view was rising; and during the recovery, when a large fraction has thought that credit was tough to get.

In a nutshell, the Wells Fargo surveys indicate that we are in a period of tighter small business credit than before the Great Recession.

Source: Created from data from the Wells Fargo Small Business Survey

About the Author

Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool's Gold: The Truth Behind Angel Investing in America ; Illusions of Entrepreneurship: and The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By.

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Source: http://smallbiztrends.com/2012/02/small-business-credit-remains-tough-to-get.html

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