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Credit Crunch Looms Large For Small Biz
The credit crunch driven by the U.S. housing crisis appears to have hit another engine of the American economy — small businesses.
After years of fast and loose lending, major banks have begun tightening standards for loans to small businesses — often described as the backbone of the jobs market. That is making it harder to gain funding for anything from buying equipment to hiring new workers.
“We’ve been concerned about this for some time, but things are really beginning to deteriorate,” said Todd McCracken, president of the National Small Business Association (NSBA).
Many small businesses are seen heading for trouble because they used home equity loans to fund their businesses during the housing boom, saddling themselves with too much debt in the process.
With home prices dropping, some small business owners are now left with properties worth less than the money they owe the banks.
Photo by ugaldew.
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