Small Businesses Are Depressed

The Small Business Optimism Index is going down - and that's not good. Small businesses are one of the engines of economic recovery and without them any employment recovery will likely stall and spiral down. Small businesses are of strategic importance and therefore the government should promote conditions where they can succeed - or at least have a go at trying to succeed.

Some experts say the problem is lack of sales not lack of funding. Other experts say it's lack of funding, not lack of sales. Personally, I think it's a little bit of both. There is a problem with sales demand but also a problem of access to capital and business financing. Stimulating demand/sales is a politically charged subject - so I will avoid it. However, most would agree that appropriate access to properly (risk adjusted) priced business financing would help the situation. And at this point in the economic cycle - this is not happening.

We see this all the time on the purchase order financing side of our business. We have noticed that there is an influx of prospects that have good financials and should qualify for bank financing - but they aren't. They are being declined by banks. They come to us because we are their "Plan B".  The problem is that Plan B is more expensive that conventional bank financing so these companies are seeing increased financing costs - which drags down profits. I think this is a problem of our current economic environment that needs to be addressed.