Small Businesses Feel Credit Squeeze

The Federal Reserve predicts that lending will remain tight for at least another year.

Frankly, there is no relief in sight.

The debt-securitization markets are barely moving. There's fundamentally a lack of trust in the economy and the banks.

Small businesses generate most job growth and borrow most of their money from banks.

Not only consumers, but also small businesses are reducing their level of debt.

The NYT reports:

As the financial crisis has largely eased in recent months, big companies have found credit increasingly abundant, with bond issues sharply higher.

But for ordinary consumers, the picture is quite different. What was once of a flood of come-ons for home equity loans and credit cards has been replaced by notices of lowered credit limits.

For many smaller companies, too, borrowing remains tough. Some 14 percent of small businesses found loans harder to secure in August than in July, according to the most recent survey by the National Federation of Independent Business. Among companies borrowing regularly, less than one-third reported that all their credit needs were being met.