US Small Business Choked for Growth

Normally, small business startups and hiring would already be leading the economy back to a cycle of growth and increasing employment. In the current prolonged recession, several factors are inhibiting the normal healthy rebound of small business.

In a speech [Monday], William Dudley, the president of the Federal Reserve Bank of New York, identified financial constraints for small businesses as a restraint on the pace of economic recovery. Specifically, he said:

"For small business borrowers, there are three problems. First, the fundamentals of their businesses have often deteriorated because of the length and severity of the recession—making many less creditworthy. Second, some sources of funding for small businesses—credit card borrowing and home equity loans—have dried up as banks have responded to rising credit losses in these areas by tightening credit standards. Third, small businesses have few alternative sources of funds. They are too small to borrow in the capital markets and the Small Business Administration programs are not large enough to accommodate more than a small fraction of the demand from this sector."

President Dudley's comments are even more relevant in the current recession if one considers the disproportionate effect the recession has had on very small businesses. _FinancialArmageddon

You must add the impact of minimum wage increases to the above constrictive forces. In addition, uncertainty over the nature of upcoming Obamacabre health care regulations, taxes, fines, etc. on top of a host of other uncertainties relating to Obama's indifferent attitudes toward small businesses and startups must give entrepreneurs and would-be businesspersons pause. The vague but ominous Obama energy policies are another large source of uncertainty thrown over the business and startup communities.

The economy needs the dynamism of small business and startups. Unfortunately, the Pimps and Skanks of government and media are doing almost everything in their power to remove all positive incentives for starting small businesses, while laying on the negative incentives with a super-sized trowel.