While there have been many attempts to spur small business growth, such as the Small Business Jobs and Credit Act passed last September, the sector remains stuck in a tentative spending mode - a condition that has hampered private sector job creation and made it more difficult for entrepreneurs to file an LLC in California.
To make matters worse, the relationship between banks and small- and medium-sized businesses remains troubling. A study conducted last year by Pepperdine University found that only 40 percent of small businesses have access to their financing needs, while a separate study by the New York Federal Reserve found that three-quarters of small businesses received little or none of their credit requirements.
Meanwhile, Power Consulting released a survey in November that exemplifies the growing disconnect between banks and small businesses. According to that survey, 36 percent of bankers made no attempt to establish the size of a customer's business when approving a loan, while 21 percent did not even request follow-up information.
"Bankers will be more successful in expanding their small business client base if they take the time to learn about those customers' business dynamics before recommending products," said Frank Aloi, president of ath Power Consulting. "But many important questions about the customer's business are simply not being asked."
Tags : ca, financial management, form an llc, small business management
Posted: Jan 5th, 2011