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Credit For Small Business Loans Might Be Relaxing

Posted On: 4/25/2011

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Federal Reserve Board, Elizabeth A. Duke, small business loan, small business capital, small business lending, vending machine financing, amusement machine financing, equipment financing, vending business financing, International Factoring Association Conference, business credit lines, vending operator

WASHINGTON -- Economic conditions may be turning around for operators unable to obtain credit from banks or other lending institutions. During a recent speech, Federal Reserve Board governor Elizabeth A. Duke expressed what could be described as guarded optimism when it comes to the credit policies for small businesses.

Speaking before the 2011 International Factoring Association Conference in Washington on April 14, Duke pointed to both a decline in credit applications by small businesses and tightening of credit by lenders following the financial crisis that led to the small business credit crunch.

"In the wake of the financial crisis, small business owners and potential small business owners likely experienced a substantial reduction in the personal resources necessary to start or sustain a business," Duke said. "At the same time, small business loans became harder to get, and when they were available, both price and non-price credit terms were likely quite restrictive. Many small business owners were so convinced that their requests would be denied that they did not even apply for credit."

However, she now sees evidence that banks are relaxing their former restrictive policies and small businesses are once again optimistic enough to apply for credit. "The recent easing in banks' lending policies and [their] improved expectations with respect to credit quality are indications that financing conditions for at least some small businesses are likely improving," she said.

Duke backed up her claims of a continued and growing optimism on the part of small business owners by citing a survey conducted by the National Federation of Independent Business in which respondents predicted improved business conditions in the near future.

"Other survey data collected by the NFIB are also consistent with more favorable conditions for small businesses," she continued. "The percentages of small business respondents who believe it is a good time to expand, and who plan to make capital expenditures over the next three to six months, have recently risen to levels not seen since mid-2007."

This may be good news for small vending and amusement operators who have seen credit lines vanish or severely limited in the past few years. At the very least, it could show some small progress in the right direction.

"Although no definitive data source exists, the combination of a variety of recent survey results paints a picture of increasing optimism about future sales and business conditions and a corresponding easing of credit availability for small businesses," Duke said.