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.

Recognizing that many small businesses are still struggling to secure credit, President Barack Obama announced a plan that would encourage community banks to issue more small business loans.

Under the plan, community banks with under $1 billion in assets would be eligible for lower-cost capital if they submit a small business lending plan and document their lending in quarterly reports, said the White House. If approved, the banks would pay the government a 3 percent dividend instead of 5 percent.

Obama also said he will seek legislation raising the limits for Small Business Administration loans from $2 million to $5 million and as much as $5.5 million for manufacturing, according to Bloomberg News.

The president said these steps will lead to “more jobs, more growth, and a stronger economic recovery.”

Some legislators and small business owners have complained that the administration’s recovery efforts have focused too narrowly on bailing out big banks.

Obama asked Treasury Secretary Timothy Geithner and SBA administrator Karen Mills, to gather a group of regulators, congressional leaders, lenders, and small business owners “to determine what additional steps we can take to get credit flowing to small businesses that want to expand,” said Bloomberg News.

Top economists see the beginning of an economic recovery but say high unemployment will continue through 2010, according to a July survey of 49 economists by USAToday.

The majority of the economists surveyed predicted the jobless rate will top 10 percent later this year. Unemployment figures released on Aug. 7 showed a slight decrease of 9.4 percent in July from 9.5 percent in June – the first time unemployment dipped in 15 months.

Economists told USAToday recovery will be “anemic” due in large part to massive consumer debt and a tight credit market. They did cite a few bright spots, though, with the majority saying existing home sales have bottomed out, consumer spending stabilized and CEO confidence growing.