As entrepreneurs looking to form an LLC in New York find trouble accessing credit, a number of recent surveys are compounding their troubles with conflicting reports on the state of small business lending.
For example, the National Federation of Independent Business recently reported that 92 percent of small companies met their credit needs in January, while the New York Federal Reserve reported last fall that three-quarters of small firms failed to meet their credit requirements in the first half of 2010.
In a recent article for the Wall Street Journal, Angus Loten suggests the discrepancy can be traced to the fact that large banks are lending mainly to the "biggest and best" small businesses.
Consider Bank of America's recent report that it loaned $18 billion in credit to small businesses last year.
"Last year, Bank of America provided $74 billion in credit to medium-sized business, defined as companies with annual revenue between $20 million and $50 million," Loten adds. "That's a significant amount more than smaller companies received."
While it is true that medium-sized firms likely require larger loans, the fact that average small businesses are forced to offer up substantial collateral for credit remains a significant challenge for the economic recovery.
Tags : financial management, ny, small business management
Posted: Feb 8th, 2011