Small Business Recovery is Sluggish
Business + Economy

Small Business Recovery is Sluggish

Samuel Demisse’s Maryland-based coffee importing business was prospering even after the 2008 financial crisis. New orders poured in. But without enough funding to pay suppliers in Ethiopia, he no longer could fill the demand.

Gone were the pre-crisis days when banks told him he was preapproved for loans of as much as $100,000. Instead, even though he had always made his payments on time, his bank had slashed his line of credit, and others he visited also turned him away. “I couldn’t fulfill the demand, because I didn’t have the working capital,” said Demisse, owner of Keffa Coffee in Towson. “Without financing, you cannot do anything. . . . It’s like trying to drive a car without gas.”

In the past, the revival of small businesses helped lift the U.S. economy out of recession. But as many larger firms are getting back on solid footing and big banks have returned to profitability, small-business activity has remained unusually sluggish this time, offering little help in bringing down the unemployment rate.

Since the financial crisis, the Obama administration has created a patchwork of programs aimed at helping existing small businesses and spurring new ones. Among them: numerous tax breaks, expanded Small Business Administration loans, measures designed to get small banks lending again, efforts to help small businesses begin exporting, and public-private partnerships intended to boost start-ups and fill the venture capital void that has persisted during the crisis.

Obama has also asked federal agencies to review their regulations for ways to streamline or eliminate rules that unnecessarily burden small businesses.

Read more at The Washington Post.