One of the biggest problems the economy has faced emerging from the recession has been the lack of available credit to small businesses. The New York Federal Reserve reported last year that three-quarters of small businesses did not meet their lending needs in the first half of 2010.
Meanwhile, in California - a state that is currently grappling with a deficit reaching upwards of $25 billion - lending to small businesses has been all but crippled in recent years. The California Reinvestment Coalition recently reported that small business loans from Bank of America, Citibank and Wells Fargo shrank by a total of 64 percent in the Golden State from 2007 to 2009.
"These statistics are chilling," said Eric Gil, co-owner of two downtown Santa Cruz clothing retailers, told the Santa Cruz Sentinel. "Without lending to the small business community, there is no jobs recovery."
Many organizations, including the CRC, have urged the Obama administration and California's newly-elected Governor, Jerry Brown, to focus efforts on small business, as that sector employs nearly 50 percent of the private sector workforce and, according to a report from the CRC, has generated 65 percent of new jobs over the past 15 years.
While commercial banks may not be helping many entrepreneurs seeking to incorporate in California, small companies may be able to look toward the recently passed Small Business Jobs and Credit Act, which the Small Business Administration announced this week has helped the agency guarantee more than $10.3 billion in loans since September.
Tags : ca, financial management, incorporation news, small business management
Posted: Jan 6th, 2011