S. Chamber of Commerce; Jorge C. Corralejo, Chairman of the Latino Business Chamber of Greater Los Angeles; John D. Harrison, Superintendent, Alabama State Banking Department; Kathleen P. Sowa, National Business Credit Executive, Bank of America; Karen Mills, Administrator of the Small Business Administration SBA, and other experts, regulators, and industry participants. Small Business Sales and Loan Demand Depend on a Recovering Economy The overall economic recovery is critical to small businesses’ sales outlook and their demand for credit. Small businesses continue to identify poor sales as their single most important problem, a situation unchanged since late 2008, according to surveys by the National Federation of Independent Business NFIB. While weak sales have dampened small business loan demand, Federal Reserve Chairman
Bernanke explained that a strengthening economy will fuel a circle of recovery: “We see the economy strengthening,” Bernanke said. “And that means
more sales…that will make these businesses stronger, make them more creditworthy and it will be a virtuous circle…More cash flow and also higher collateral values makes businesses more creditworthy, gives them more credit demand, allows them to expand, allows them to hire. ”Panelists acknowledged several existing initiatives that support small businesses. For example, recent legislation increased the lending capacity of SBA programs and created tax incentives for business investment.
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However, access to credit remains a challenge for some.
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Now, as the business outlook improves, credit demand from small businesses is beginning to strengthen. However, access to credit remains a challenge for some. Lower real estate values and the cumulative effects of lower revenues have damaged small businesses’ credit capacity, and banks’ lending standards—although no longer tightening—loosened only marginally in 2010. In addition, as evidenced by high levels of problem banks, the recession has affected the ability of some banks to lend as they focus on correcting existing problems. In response to these issues, policymakers and regulators continue to actively seek ways to facilitate the flow of credit to small businesses. On January 13, 2011, the FDIC hosted a forum, “Overcoming Obstacles to Small Business Lending,” to identify credit related issues facing small businesses and potential solutions. 2 The forum fostered communication among policymakers, regulators, small business owners, lenders, and other stakeholders. The forum featured leaders in the government and private sector, including Spencer Bachus, Chairman, House Financial Services Committee; FDIC Chairman Sheila C. Bair; Federal Reserve Chairman Ben S. Bernanke; Mark R. Warner, U.
