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Tuesday, June 8, 2010

I Repeat, Small Businesses Say Their Credit Needs Are Met

It is not always in the best interests of a business to take out more debt, so it is not surprising that a June NFIB report shows that 92% percent of the small business participants reported all their credit needs met, or they did not want to borrow.

This is information that I have been trying to spread in answer to the many “banks aren’t lending” articles that are out there. Most recently, I reviewed lending data in my Lending Metrics series of blog posts, but we have also repeated this information in congressional testimony over the last two years.

In its June report, the NFIB noted that only 3% of owners cited finance as their top concern. To put this in perspective, before 1983, 37% of owners cited finance or interest rates as their top concern.

And why is this? The NFIB answers that question quite clearly:
Even if credit were free, these business owners would not spend the money to hire or make capital outlays since such expenditures have no prospect of earning their keep. … What businesses need are customers, giving them a reason to hire and make capital expenditures and borrow to support those activities.

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