Here's how frothy things got: By 2006, the National Federation of Independent Business had data suggesting that 90 percent of business owners who wanted credit were able to obtain it. "That's an extraordinary number," said Dennis, reminding me that 10 percent of all small businesses die each year.
Something was bound to give, and the financial crisis gave it good. A survey that the NFIB's research arm released Feb. 2 found that demand for small-business credit remained weak in 2010. Of the 856 people interviewed, 52 percent said they did not try to borrow last year, up 7 percentage points from 2009.
This shift from a decades-long expansion of credit options for small-business owners is a crucial one. The NFIB Research Foundation's report states: "The change in momentum from constantly increasing competition and access to credit to an abrupt freeze, if not direction reversal, is tied to the current confusion exhibited by many owners and analysts when assessing small-business credit conditions."
Remember: Lack of access to credit isn't the biggest headache for small businesses. As the NFIB reminds us each month with its optimism index, lack of sales is, and they won't improve until economic growth heats up.
That recognition doesn't prevent government officials from holding forums such as the Federal Deposit Insurance Corp. did last month called "Overcoming Obstacles to Small Business Lending." At that event, Federal Reserve Chairman Ben S. Bernanke noted how important higher sales are: "If the sales come, that will make these businesses stronger, make them more creditworthy, and it will be a virtuous circle."
