The number of small business owners who actively sought credit from lenders fell in 2010, in part because many opted for other avenues of financing or gave up on applying altogether, a new report says.
The report, by The National Federation of Independent Business, found only 48 percent of small business owners surveyed applied for credit last year. This represented a decline from the 55 percent observed in 2009.
The study also reported 41 percent of small employers were able to receive all the financing they needed, while 19 percent reported they got most of what their operations required. In addition, 16 percent were denied by lenders.
“Unfortunately, the economic atmosphere for small businesses did not improve much in 2010,” said Denny Dennis, NFIB Research Foundation senior fellow and report author. “Despite an active legislative session, new federal policies have fallen short.”
In spite of rising interest rates, credit cards were the most popular form of borrowing among small businesses, as 45 percent reported using personal cards to pay business expenditures. However, many business owners who carried large balances as a result of economic downturn were denied by lenders.