As Presidential Race Tightens Small Business Plays Big Role
Meanwhile, President Obama is touting his successes, including the impact that SBA lending has had on small business owners. The SBA perhaps the most effective program ever set up by the U.S. government and has helped countless small businesses get off the ground and expand. The President is pushing incentives, such as a 10 percent income tax credit to firms that create new jobs, but it remains to be seen if Congress will pass it.
Meanwhile, it is far from easy for entrepreneurs searching for capital. The latest Biz2Credit Small Business Lending Index, our monthly analysis of 1,000 loan applications, found that loan approvals by big banks dropped from 10.6% in April to 10.2% in May 2012. Further, small bank lending fell from 45.9% in April 2012 to 45.5% in May 2012. The good news is that May 2012 figures for both large and small banks are higher than they were one year ago.
Loan approval rates at credit unions increased to 57.6%, up 0.2% from April 2012 and up more than six percentage points higher than in May 2011. Alternate lenders also upped their lending to 63.2%, as a tight market for traditional funding is forcing small businesses to look for options such as factoring and merchant cash advance.
Look for both Mitt Romney and President Obama to debate where the country is economically from now until November. The economy is the most important issue in the 2012 Election. Small business, which creates the lion's share of new jobs, will play a prominent role in the political debate.
Lastly, we are proud that Profitwise, a publication of the Federal Reserve of Chicago's Community Development and Policy Studies Division, highlighted Biz2Credit in its Small Business Access to Capital publication this month. (Click to download Profitwise and read the article by Susan Longworth, a business economist at the Federal Reserve Bank of Chicago, on pages 7 and 8.)
Increasingly we are being invited to participate in conferences about small business lending. Rohit recently addressed the National Association of Federal Credit Union (NAFCU)'s national small business lending conference and the American Asian/Asian Research Institute's panel on small business growth. On Monday, June 25, he will be a panelist at the 2012 New York Times Small Business Summit at the Grand Hyatt in New York.
Rohit Arora and Ramit Arora