Academic journal article ABA Banking Journal

Small-Biz Finance: Mixed Results

Academic journal article ABA Banking Journal

Small-Biz Finance: Mixed Results

Article excerpt

While the economy continues to mend, one sector pertinent to its growth continues to show mixed signals. Small businesses depend on a variety of factors in order to succeed including location and type of industry. Because of this, banks have either been more open to financing small businesses or not. Some recently completed surveys spell out these contradictions and the challenges the small business banking customer is experiencing when it comes to obtaining credit.

According to a one recent indicator, small business owners appear to have rebounded in confidence due to improvements in the economy. Discover Financial Services reported in its Discover Small Business Watch that the confidence index rose in January to its highest point in three years.

Discover found that the small businesses polled have a favorable economic outlook for the first half of 2011 with 31% believing that economic conditions for their businesses are improving, a rise from 25% just a month earlier.

Adding to the more positive business outlook, a Wells Fargo/Gallup Small Business Index Survey conducted late last year found that over half (57%) of small business owners surveyed said they planned to make changes in 2011 with 43% saying they would expand their business operations. The Wells Fargo/Gallup findings also noted that 18% planned on increasing their staffs in 2011, an increase from 13% in the third quarter of 2010.

Still, when it comes to credit many businesses are not quite as optimistic. A recent Greenwich Market Pulse survey by Greenwich Associates highlights that two-thirds of small businesses believe that banks are not meeting their credit needs. In fact, half of the 221 small businesses polled for the January Greenwich Market Pulse stated that it is harder for them to get credit than it was a year ago, when economic conditions were worse. …

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