Why Small Businesses Just Can’t Get It Together

by Investment U Research Team
Monday, December 21, 2009

From the beginning, the recession hit small businesses hard. And even now with signs of some kind of recovery peeking through the devastation, they still can’t seem to catch a break.

That doesn’t indicate a promising future for the U.S., considering that those companies accounted for roughly 65% of all new jobs in America during the past 15 years.

Large corporations received a record number of corporate bonds this year, even though they largely rely on other sources to stay afloat. But small businesses, which count on banks for 90% of their financing, continue struggling to attain even the simplest loans.

Without that outside financing, they can barely survive and they definitely can’t prosper.

In the past, small enterprises have always relied on local banks to fund them. And in the past, local banks were happy to oblige.

But with 130 bank failures this year, that symbiotic relationship doesn’t hold up the way it used to.

Recognizing that, the government instituted the February Recovery Act… then ended it prematurely – with 679 applications still pending – when it ran out of cash, leaving small businesses in the lurch once again.

Technically, President Obama just offered a new plan of action to help small businesses last month, but it contains too many questionable proposals and an overall shortsighted scope of the problem.

Clearly, small businesses can’t rely on the government for any real, long-lasting help, nor can they bank on their former financial friends.

And without access to secure lending and financing, they’re in for a long, harsh winter.

Good investing,

Sheena Martin

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