Many Small Business Owners Still Having Trouble Accessing Credit

While the improving economy has been a boon for many small businesses, a large percentage of owners say that while they may want to expand in some way, their ability to access the credit that would make such a move possible is still rather restricted.

Slightly less than half of all small business owners say that the ability to access credit is a problem for their companies, and most want banks to do more when it comes to delivering those types of funds, according to a new poll from the American Sustainable Business Council. That includes loosening restrictions on who can obtain credit when they apply for it, as 57 percent say that lenders of all types need to consider more than just dollars and cents when considering an application. Instead, owners want them to focus on social or environmental benefits a company could create as well.

"It's a serious problem for the economy that almost half of very small businesses still face a credit crunch five years after the financial crisis," said Richard Eidlin, director for public policy for ASBC. "The poll points to two obvious solutions to the access to credit problem: more well-regulated, financial services innovation and more competitive opportunities for local lenders."

In addition nearly four in five owners think the federal government should be doing more to strengthen the national banking system because it has done either a fair or poor job of ensuring banks are protected from future crises, which in turn might make them more likely to extend credit to companies in general, the report said. Somewhat dichotomously, however, another three in five say that the government should do more to address the ways in which banks considered too big to fail are allowed to take on significant credit risk.

In general, access to credit is one of the primary factors that can be affected by small businesses' ability to access credit, Claudia Viek, the chief executive officer of the California Association for Micro Enterprise Opportunity, explained. This is particularly true of the nation's smallest businesses, which might otherwise be looking to expand in the near future, but cannot do so.

Of course, hiring comes with a more significant price tag than just the cost of bringing a new worker aboard. Small business insurance policies, including those for general liability insurance, can become more costly when companies have a larger amount of employees.