Small Business Lending: Does It Matter to Micros?

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Lending, borrowing and credit.

They are topics that you simply have not been able to avoid in the past year, whether you are a small business or not. With the fluctuations in the economy, the debate about the debt ceiling and the stock market going up and down, the state of the credit market has been in flux. And while small business lending has picked up in the past few months, at least according to some, it’s still a hot topic.

The argument is that small businesses need money to survive, and that means they need access to credit. A recent story in the Wall Street Journal showed that small business credit card usage is up, while also citing that 60% of small business loan applications have been rejected this year.  So while small businesses are using existing credit, they don’t necessarily have access to new credit lines.

But are micro businesses feeling the same pain when it comes to lending that other small businesses are? Do they even need the type of money or investment that others might need in order to survive and keep going? The answer, at least according to Visatprint’s most recent micro business survey, is a very firm no.

An overwhelming 85% of survey respondents said no when asked if they had attempted to get a loan or financing for their business in the last 12 months.  Of the small percentage who have tried to get a loan, most found the process difficult or were not able to secure the financing they wanted.  So while the credit standards are clearly still tight and getting loans is more difficult than it was in the past, it appears that for the most part micro businesses don’t need the type of infusion of capital that larger small businesses do.

While this might not come as a surprise, given the size of micro businesses as well as their desire to stay small, it’s still worth noting given the vast number of them (over 25 million) in the United States.  It’s possible that despite the borrowing climate, many businesses simply don’t need or want the money at this point.  Is it possible that the claim that tight lending standards are restricting small businesses is simply overblown?

Have you tried to borrow money for your business in the past year and found the process to be difficult? Or have you been able to continue to succeed without extending your credit?  Let us know in the comments below.