City’s Small Businesses Still Search for Credit
Small businesses in Greater New York are continuing to feel squeezed by the credit crunch, according to a new survey released Monday by the Federal Reserve Bank of New York.
The first-ever survey by the Fed paints a picture of the financial challenges facing the region’s companies with less than 500 employees, a sector that nationally employs almost half of all Americans and is crucial to job creation.
“With this great recession on us, it’s been hard for small business to get credit,” said Carl Hum, president and chief executive of the Brooklyn Chamber of Commerce.
Nearly 60% of the small businesses surveyed said they applied for credit during the first half of 2010, but only half were successful. Nearly two-thirds of companies seeking new business lines of credit — the most sought after form of financing — were rejected.
Nearly 70% of the companies that sought business loans were denied. Construction and retail businesses applied for credit at higher rates, but neither was more or less likely to obtain credit compared to other sectors.
Small businesses revenue plunged as well. Almost half of the companies surveyed said they had significantly lower revenue during the spring of 2008 through the spring of 2010.
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