Small Business’ Access to Capital

Access to capital is essential to the creation and growth of any business. But according to a new survey released by the U.S. Chamber, many small businesses — particularly women and minority-owned businesses — are facing obstacles to obtaining the capital they need. This spells trouble for the U.S. economy, because small businesses are a driving force for job growth and innovation in our country.

We believe our access to capital survey is the first of its kind to ask small business owners how they finance their businesses. Of the 1,080 respondents who answered our survey, 56% of them were women or minorities — two of the fastest growing groups for small business ownership.

The study found that Caucasian business owners rely largely on bank loans for initial and ongoing financing, while 35% of minority business owners make use of credit cards for similar purposes. However, half of all minority business owners surveyed — and an even greater percentage of African Americans and Hispanics — said that the availability of credit is among the top three business problems they face.

Men and Caucasian respondents who needed a loan were much more likely to request business — rather than personal — lines of credit. On the contrary, women and minorities relied more often on personal lines of credit. Finally, we were surprised to learn that only about a third of respondents said they believe a business plan plays a role in obtaining credit, indicating a great underappreciation of a strong business plan.

The Chamber released the results of this study at an event it hosted called Growing Your Business: It Takes Money to Make Money, where small business owners and policymakers gathered to discuss various obstacles to obtaining capital — and ways to overcome them. That event was one of the many things the Chamber is doing to help make capital more available to those who need it. The Chamber supports government loan programs like the Small Business Administration 7(a) and 504 guaranteed loan programs. Our lobbying efforts helped expand SBA loans by $16 billion this year, and any time a regulation threatens eligibility for one of those programs, the Chamber vigorously opposes it.

By Thomas J. Donohue, President and CEO, U.S. Chamber of Commerce

Full Story: http://www.uschamber.com/publications/weekly/commentary/050531.htm

(Thanks to Kerry Schaefer at the Montana Chamber of Commerce http://www.montanachamber.net/ws/home.php for passing this article along- Russ)