Follow the Money

Small business is where job growth comes from. But new data shows that bank loans to small businesses are at their lowest level since 1999. Lots of politicians are paying lip service to entrepreneurs, but the data shows that what we’re doing now isn’t working.

A report by the Investigative Reporting Workshop found that the total volume of loans to businesses of $1 million or less has been in decline ever since June 2008. These small loans are vitally important to small businesses, as entrepreneurs all over the country know well.

The steady and continuing decline comes even though overall business lending has already begun to recover. After bottoming out in 2010, commercial loans as a whole have been going up all year long.

Small businesses are the lifeblood of the American economy, and almost all the jobs created come from them. So this lack of funding for small businesses is very troubling, and that’s why I believe making funding more available for small businesses is one of the most important things we need to do to help small businesses.

This picture measures well with the findings of the National Federation of Independent Business, which surveys small business attitudes and trends every month. The percentage of businesses planning to expand over the next three months is still well below the level that would signal a recovery.

The approach we’ve taken to our economic troubles has been a lot harder on small businesses than on the rest of the economy. Big business has been able to use its lobbying power and close relationships with government to get back on track. But small businesses have been left in the lurch.

There’s money out there. Both corporations and banks are flush with cash, as the Investigative Reporting Workshop report found that bank profits for last quarter were the highest in four years. But our policies are making it hard for entrepreneurs on both ends. It’s harder for businesses to get the money they need when they apply for it, and other entrepreneurs are just completely sitting on the sidelines. They’re not creating and growing their businesses the way they want to, because they’re so discouraged by the business environment.

We need our small businesses to grow and thrive, to create more wealth and prosperity in this country. Despite all the rhetoric from politicians about how important small businesses are, real world results prove that what we’re doing right now is harmful to entrepreneurs. It’s time to see the signs, and reverse course.