NY Fed Study Find Small Businesses Struggling to Garner Credit

A poll of small business owners finds that the perception on the street is that it is unlikely they’ll be approved for the credit they ask for – whether via a partial amount granted or full-on denial – so many have simply stopped applying. But there does seem to be some optimism out there for the next year, whether based on tangible signs or blind hope. Meanwhile, interviews from the poll seem to tangentially promote an idea near and dear to NACM: workers need to advance and expand the roles of their positions to boost their stability.

The Federal Reserve Bank of New York unveiled its Small Business Borrowers Poll, which included results that indicated microloans are at a peak demand right now yet remain highly difficult to garner, especially among start-ups. This often is the case even for new businesses run by a proprietor with a sterling credit history. Poll results based on N.Y. Fed polling also found that nearly 50% of those small business that did not apply for credit/bank loans, opted not to do so out of belief and/or fear of rejection. Perhaps that is with good reason as only 13% of those who did apply in recent months and participated in the poll received the full amount requested. Just more than one-third received a portion of the requested amount, according to the N.Y. Fed.

Additionally, interviews included in the Fed’s report shined a light on the widely held believe that small business owners do not see smooth sailing for most of the remainder of 2012, even if they are upbeat about things being better at this time next year. But, in the meantime, business owners are preparing as if credit isn’t going to come their way, and want employees, from sales to credit, to realize the importance of stepping out of the traditional box of their job descriptions to provide more value and, thus, boost the prospects for the business and their job security alike.

“Whatever you think cash-flow-wise you will need for your worst, worst scenario, like the one you think is never going to happen, double it,” said Allison O’Neill, a New York clothing store proprietor interviewed by the Fed. “Everyone who works here wears many hats…Everyone who's here is a sales associate and a social media manager, and a marketing manager, and an inventory specialist…”

-Brian Shappell, CBA, NACM staff writer

(Note: To view the full report, visit http://www.newyorkfed.org/smallbusiness/2012/).

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