Small Business Credit Demand Still Low

Over the last few years, millions of small businesses across the country have likely seen their bottom lines improve quite considerably, thanks to economic progress that was stifled for years after the recession. However, despite the steps forward that many are making – and the eyes their owners are turning toward expansion – one thing that doesn’t seem to be in the cards for many of them is seeking financing from lenders.

There is plenty of evidence to suggest that while interest in acquiring small business credit for one reason or another is growing, but it’s still nowhere near the levels observed prior to the economic downturn, according to a report from CNBC. This comes despite the fact that optimism among owners is at some of the highest points seen in several years as well. The problem, experts note, is that there’s still a long way to go in both regards before anything resembling a pre-recession norm is realized once again.

“Optimism isn’t really up and running,” Bill Dunkelberg, the chief economist for the National Federation of Independent Businesses, told the network. “We’ve gotten so used to bad numbers that today’s numbers look good. Small businesses haven’t had a good enough reason to go out and borrow money and invest heavily yet.”

What trends are emerging?
What’s interesting is that credit for small businesses probably hasn’t ever been more affordable than the levels observed in the last few months, the report said. Despite this, owner interest is relatively low, and banks continue to turn away many applicants despite the fact that credit quality has been on the rise for some time. All of that creates an environment in which owners have come to rely more on the cash they have on hand, and occasionally on smaller, alternative lenders than industry giants that can cut them big checks. Nonetheless, many experts believe that demand for traditional credit will rise once again in the near future, but when that will happen remains more than a little uncertain.

Owners who want to position their companies well to obtain credit may want to consider the benefits of improving their bottom lines by cutting costs. For instance, if they can find more affordable small business insurance – including policies for general liability insurance – they may be able to trim thousands of dollars from their budgets annually.