As I’ve written before, current data suggests that we are in the midst of a slow, but steady economic recovery. Yet one of the most critical areas where we are not seeing enough recovery is small businesses’ ability to access capital.
Image: The latest Intuit Employment and Revenue Index shows small businesses added 10,000 new jobs in March. Unfortunately, small businesses are lagging behind the rest of the economy. While overall employment has risen 4.5 percent in three years, small business employment has risen only 1.4 percent over the same period.
Small businesses want to grow and they want to hire people to help them grow. To do this, they need access to the financial resources that will allow them to hire new employees and help drive economic growth both in their communities and in our nation as a whole.
Unfortunately, too many small businesses today are facing increasing difficulty when it comes to accessing the capital they need:
- 43% of small business owners said that in their need for funding they have been unable to find resources – loans, credit cards or individual investors.
- 29% of small business owners reported that their loans and lines of credit have been substantially reduced over the last four years. And 1 in 10 had their lines of credit and or loan called in early by the funding source.
- Overall, 53% of businesses have been unable to grow their business or expand operations, including hiring, due to lack of capital and 32% have reduced their employee roles.
This needs to change. Small businesses play a vital role in creating jobs and growing the economy. It is incumbent on industry, government and financial institutions to find new and innovative ways to ensure that small businesses can access the capital they need.
At Intuit, we are piloting a new service called QuickBooks Financing, which will help small businesses obtain capital faster and at lower rates from lenders. The service also helps lenders make more informed risk decisions, increasing the potential for small businesses to obtain a loan quickly.
We know there is much more than can be done by us and others. I urge lenders to be innovative – look at other ways to verify a small business’s assets rather than what is just on its books. As the backbone of the economy, small businesses should not be excluded from receiving a loan, simply because there are not financial assets on the books. Get creative!
I am also interested in what you think about this important issue. In particular, I would love to hear your ideas on what is the one thing that banks, government, and industry could do differently in order to help small businesses today.
Let me know what you think in the comments and I promise I will bring the best of these ideas with me as Intuit engages with all of the key stakeholders on this important issue.