Small-Business Borrowing Still Hasn't Improved

Fewer business owners can find the money they need.


I recently took a look at National Federation of Independent Business data on the satisfaction of small-business borrowing needs and was struck by the continued downward trend. According to the NFIB data, fewer small businesses said in March that their borrowing needs had been satisfied in the previous three months than at any point since well before the recession began.

In their monthly survey of a random sample of their members (who are small-business owners), the NFIB asks respondents whether their borrowing needs were satisfied in the previous three months. In the figure below, I have produced a chart of the seasonally adjusted percentage who said yes, along with the trend line.

Percent of Businesses With Borrowing Needs Satisfied in the Previous Three Months, January 2007-March 2009.

Source: Data contained in National Federation of Independent Businesses’ Small Business Economic Trends, April 2009, downloaded from

As you can see, the numbers bounce around a bit from month to month, but the overall trend is down. As the recession wears on, a decreasing percentage of small-business owners believe that their borrowing needs were satisfied over the previous three months.

When will we get back to prerecession levels of meeting the needs of small-business borrowers? It doesn't look like anytime soon.

Scott Shane is A. Malachi Mixon III professor of entrepreneurial studies at Case Western Reserve University. He is the author of The Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, Investors, and Policy Makers Live By, among other books.

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