Small Businesses Loans Still Tight, Years After Official Recession End

Sometimes it’s a bit hard to believe that the recession has officially ended- many Americans still struggle with unemployment, disillusionment and difficulty getting past living paycheck to paycheck- and despite a lot of shout outs from Washington, small business loans are an area in which the economy is still failing to gain purchase.

One of the few issues Republicans and Democrats both give support- at least verbally- is small business, and small business loans are the foundation on which these crucial, economy-supporting entities are built. But while large businesses and corporations are reporting record profits, their independent brethren are struggling to survive or in many cases, not starting up at all. And just as many Americans report being unable to recover financially due to an endless cycle of low credit scores and high interest rates, so to do small business loans applicants suffer from an inability to move forward due to previous losses as well as personal setbacks.

The Twin Cities Star-Tribune spoke with Kevin Whalen, who is the spokesman for Minnesotans for a Fair Economy. He explains the frustration small businesses experience in getting banks to work with small businesses to begin a true recovery:

“We’re still stuck not being able to find jobs and create businesses, while the people that crashed the economy… are sitting on more money than any group of people in history.”

The Metropolitan Consortium of Community Developers (MCCD) is a non-profit lender in Minnesota, and financial resources coordinator Iric Nathanson confirmed that not only do banks expect higher credit scores from borrowers, but that they now demand a full three years of profitability before lending- which basically means that if you need the money, you can’t have it. Nathanson says:

“That seems to be an issue with a number of lenders… They want the three years.”

Local business owner Charlie Hutchinson confirmed the same concept, complaining that small business loans may be light on the ground, but big business doesn’t seem to face the same hurdles:

“I’ve been through every possible channel with banks. They say they have small-business loans for business and they get money from the feds, but they won’t loan it to people that need it. I can’t tell you how incredibly frustrating it is. The only solution is to not need the money.”

Has difficulty in obtaining small business loans put you off starting up in this economy?

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