NSBA - Mid Year 2010 Report

Earlier this month the National Small Business Association released its 2010 Mid-Year Economic Report, which included survey results from more than 400 small business owners represeting every industry in every state of the nation.

The report provides some bright spots for the period between December 2009 and July 2010:

- An increase in the number of small businesses reporting an increase in revenues from 22% to 26%.
- An increase in the number of small businesses reporting an increase in profits from 19% to 24%.
- An increase in the number of businesses reporting existing growth from 7% to 9%.

However, the overall mood of the report reflects the mood of the economy: uncertain, worried, and focused on decreasing optimism, confidence, and business growth.

Small business owners overwhelmingly expect the economy to remain flat and generally uncertain. The upbeat nature of many entrepreneurs is beginning to wane. Confidence is slipping - down from 61% to 59% in the past six months. Although the majority of small business owners are confident about the future of their business, the fact that well over one-third (41%) have concerns about the on-going viability of their business is not good.

These issues are further reflected when discussing projected job growth, as economic uncertainty and growing concerns over viability do not lend themselves to expansion activities. Just six months ago 24% of small business owners projected increases in their number of employees. Today, only 22% are making such projections. Fortunately, there was also a decline in the number of small businesses projecting job cuts.

Given the historic role small business has played in job creation, any trend in net job cuts should be alarming. Furthermore, the decreases in job growth projections indicate a strong need to support small business growth and ensure impediments, such as the inability to finance growth, are removed. Creating an environment where small businesses can start, thrive, and grow will surely enable to U.S. to move more promptly toward lasting economic recovery.

More small businesses are turning to loans to support their daily business activities. As traditional banks have tightened their underwriting standards - to include increased collateral requirements, greater focus on cash flow, and higher personal credit thresholds, including credit scores - alternative sources of capital, like Community Development Financial Institutions, have found ways to become more flexible and meet the diverse range of financing needs in the small business lending community. For these "alternative" or "non-traditional" sources of capital job growth and economic expansion is often the mission.

For more information on Pathway Lending's financial products and services, visit our website www.PathwayLending.Org.