Thaw Could Be Starting for Small Business Credit

Washington, DC, July 13, 2010--The worst may be over for small businesses struggling to obtain credit, according to those who gathered at the Federal Reserve for a one-day conference.

The Fed's survey data suggest that current economic conditions for small businesses, though still difficult, are less dire than they were in 2009, said Robin Prager, an assistant research director at the Fed, at the forum on small-business lending.

Nevertheless, while major banks eased loan conditions for big firms during the first quarter, lending standards remained tight among the local banks on which small businesses rely, according to the Fed survey.

Fed Chairman Ben Bernanke noted that small businesses are essential to job creation, saying that data show that small firms employ roughly one-half of all Americans and account for about 60% of job creation. "Making credit accessible to sound small businesses is crucial to our economic recovery, and so should be front and center among our current policy challenges," he said.