Small business owners do not seem to be feeling the effects of the credit problems touted in the media, according to the August National Federation of Independent Business Small Business Economic Trends Report.
Regular borrowing activity was reported by 35 percent of owners surveyed, down one point from last month. The net percent of owners reporting loans harder to get in recent months rose two points to a net 7 percent, but this is still an historically low percentage. Readings as high as 12 percent were common in the early 1990s.
Only 3 percent of the owners cited the cost and availability of credit as their No. 1 business problem, far from the record 37 percent reached in 1982 and typical of readings for the past decade. Thirty-five percent reported all their credit needs met; 4 percent reported problems obtaining desired financing, typical of readings for the past few years. The net percent of owners reporting higher rates on their short-term loans was 14 percent (seasonally adjusted), two points above July, but one of the lowest readings since 2004.
Although tight credit does not seem to be slowing small businesses down, economic conditions have created
a very cautious attitude in small business owners according to this survey. Sales and profits seemed to be rather anemic. Capital and inventory spending was reported as weaker.
The one report that continues to worry me is that wage pressure still seems to be a problem for many small businesses. Those of us who remember inflation gone wild and past periods of stagflation (a recession and inflation all rolled into one big mess, as we had in the late 1970s and early 1980s) are keeping a wary eye on wage and other inflationary pressures in the economy.
Previous
Next