According to a recent poll by the Federal Reserve Bank of New York, the ongoing reluctance of banks to lend to small businesses does not help the weak economy.
The odds of getting a small business loan appear to be lower than the year before. This year, 13 percent of businesses that sought new lines of credit got approved, while last year’s poll was 33 percent. Firms with existing lines of credit that sought extensions got approvals this year in 17 percent of cases; that approval rate last year was 52 percent, according to Hispanic Business.com.
The annual Small Business Borrowers Poll found seven out of 10 that applied for loans were denied or got less than they applied for, said study author Claire Kramer, according to an article in the Albany’s Times Union.
Poll results were based on results in the first half of 2012 from 550 small businesses in New York, northern New Jersey, and Fairfield County.
The Federal Reserve has been trying to attract more borrowers for business investment by going after a low-interest rate policy. The bank hopes increased borrowing and investment will create more hiring and hike payrolls and product-demand.
Mike Durant, New York state director of the National Federation of Independent Business, said members are concerned about slow sales to customers worried about their jobs.
The poll also showed that small businesses are selling less. So far this year, 46 percent reported decreased sales, 34 percent worse than last year’s poll. The percent of businesses reporting stable or increased sales also dropped.
Almost eight in 10 businesses that applied for loans said they needed money to cover daily operations like cash flow, payroll and inventory. That reason for a loan was up from 62 percent last year.