Small businesses are traditionally the first to start hiring during an economic recovery, but that doesn’t seem to be the case this time around. Many small business owners say the credit crunch is a major reason they won’t be hiring anytime soon.

With little funding available, small businesses will rely more on temporary hires and independent contractors, says Business Week.

And in companies of all sizes, existing workers will just be expected to do more.

Daniel W. Glier, president of Glier’s Meats in Kentucky, an 18-person, $3 million sausage maker, told Business Week he’s keeping headcount down by restoring some workers’ hours that got cut earlier this year. He’s also using temps so that if he has to let them go, his unemployment insurance premiums won’t rise. “I’m not going to stick my neck out right now and hire people,” he told the magazine.

The good news, however, is that the number of layoffs at small and mid-size businesses are shrinking. Companies with less than 50 workers shed 75,000 jobs in October, down from 288,000 in March, said Business Week.

Several small business owners met in Washington last week with Treasury Secretary Timothy Geithner and Small Business Administration chief Karen Mills to talk about their struggles during the worst economic crisis since the Great Depression.

The business owners discussed trouble getting credit and government regulations they said are hampering their operations, among other topics.

Woody Hall, the chairman and president of Diversapack, a film manufacturing company operating in several states, said the credit crunch is hampering his company’s growth. “We just opened up a new manufacturing facility employing 50 employees and expected to grow to 150 over the next few years. We basically had no bank financing,” Hall said, according to the Washington Post.

Former chief economist for the World Bank Joseph Stiglitz said exorbitant credit card fees are hurting small businesses and the government needs to address that. According to the Washington Post, Stiglitz said the exchange fee on purchases is “a 2 percent tax on all small businesses. A lot of them have small margins. Imagine you’re got a small margin and you’re giving half of that to banks on exchange fees — how aggravating.”

Geithner acknowledged the government needs to find a way to compel banks to extend more loans to small businesses.