Since the recession began, small businesses have been cited as the most critical aspect of an economic rebound, but this claim is founded on a number of other "Goldilocks" style conditions as well.
It has been said that small businesses - employers of nearly 50 percent of the private sector workforce - are needed to lower unemployment, put money back into the hands of workers and, consequently, boost consumer activity, which constitutes the largest segment of the economy.
However, the reason small and medium-sized businesses are not hiring at pre-recession levels is partly due to a lack of necessary funding - a problem that is perpetuated by banks' tightened lending policies and limited assets.
Accordingly, Federal Reserve chairman Ben Bernanke cited this problem as the chief culprit in the economy's slow recovery.
"If banks are healthy and have more capital then they are better able to lend," Bernanke said Thursday at a Federal Deposit Insurance Corporation forum on small business lending.
However, Bernanke and FDIC chairwoman Sheila Bair both project small business lending to improve in 2011, providing relief to the masses of entrepreneurs seeking incorporation in California, New York and other active business communities.
"We think it is turning," MarketWatch quotes Bair as saying. "Most banks are profitable again. They are working through their troubled loans. We have lower rates of delinquencies and charge-offs. There is a lot beyond our control but if things continue as they are, it's slowly getting better and I think you will see lending activity pick up."
Tags : financial management, form an llc, small business management
Posted: Jan 13th, 2011