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RESEARcH ROUNd TABLE: Small Business Credit Outlook … Credit remains available to fuel small business dreams, if you know where to look – and …
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INTUIT FUTURE OF SMALL BUSINESS REpORT
R E S EARc H R OUN d TABLE : S MALL BUSINESS cRE dIT O UTLOO k
SMALL BUSINESS cREdIT: IT’S A cRUNcH, NOT A cRISIS
Credit remains available to fuel small business dreams, if you know where to look and how to qualify. America needs small businesses. And small businesses need credit to start, to grow, to innovate. Credit is more than just a way to pay bills. It gets them through seasonal slow periods. It pays for expansion. And, as we found in our previous report, it is used to amplify innovation through pursuing new opportunities or investing in new ideas, methods or markets. It’s more than a tool for today’s survival. It’s the key to tomorrow’s success. With some of the world’s largest companies lining up to receive tens of billions of dollars in federal bailouts, businesses along Main Street USA often considered the backbone of the American economy are scrambling to obtain credit. We recently interviewed those with the most at stake: small business owners who are seeking credit and financial industry executives who can provide it. While large financial institutions have dramatically cut their small business lending activities, we found that smaller lenders typically community banks and credit unions were still actively providing small business credit and credit services. To explore this further, Emergent Research and Intuit’s financial institutions division, Digital Insight, invited about two dozen leaders from small and mid-sized financial institutions to several round-table discussions on the current trends in small business lending. Our purpose: to better understand how smaller lenders see the small business credit market. The discussions revealed that: · Have money, will lend: Most of the smaller lenders represented at the discussions are actively and even aggressively seeking to provide credit and credit services to small businesses. Several mentioned they expect 2009 to be a record year for small business lending at their financial institution. · Lending standards remain high: Smaller lenders are conservative lenders. Credit qualification standards at most of the banks represented aren’t any more rigorous now than in the past, but small businesses take note: These institutions have stringent underwriting criteria for granting credit. · Unsecured credit disappearing: Small business access to cheap, uncollateralized credit especially through consumer credit cards is being cut. Small businesses that rely on unsecured loans and consumer credit cards will see reduced access to credit. · Small Business Administration loans a mixed view: Lenders differ on the value of offering SBA loans. Some find it lucrative; others see it a drain on their business. Small businesses looking for an SBA loan through a bank or credit union need to find institutions participating in the SBA loan program.
THE INTUIT FUTURE OF SMALL BUSINESS SERIES JUNE 2009 ©2009 Intuit Future of Small Business. All rights reserved.