Washington,
D.C. – As the Senate
prepares to consider small business jobs legislation this week, a
new report by the U.S. Congress Joint
Economic Committee (JEC) shows that lending to small businesses has
declined in 2010, small business hiring remains flat and the smallest firms
continue to reduce hiring.
“Small businesses
have been struggling to get the loans they need to expand and create jobs, as
this report shows. It has been almost three months since the House passed
the small business lending bill and Senate Republicans have since dragged their
feet and halted passage of this legislation for purely political reasons,” said
Congresswoman Carolyn B. Maloney, Chair of the JEC. “I applaud
Senator George Voinovich for stepping forward and agreeing to support the
bill. It is time for Congress to help small businesses get the lending
they so desperately need to grow.”
The report,
entitled “Small
Business Employment: Bank Lending Restrains Job Creation,” uses an
unpublished data series from the Bureau of Labor Statistics to update a May
2010 JEC report analyzing small business hiring between January 2001 and March
2010. The update, which includes data through May 2010, shows that small
business hiring has not started to increase, although larger and mid-sized
firms continue to increase hiring.
Additionally, the
report finds that the number of small business loans and the dollar
value of these loans are both dropping. The number of loans made to small
businesses, which peaked at 27.2 million in the second quarter of 2008, has
fallen by over 4.8 million since then, a drop of 17.8 percent. The total value
of those loans fell by $60 billion to approximately $650 billion.
Other JEC report
findings:
- The smallest small businesses – those with fewer than 50 employees – continue to see declines in hiring, even as large and mid-sized firms began to increase hiring in mid-2009.
- Overall, small business hiring remains well below pre-recession levels. In the years leading up to the recession, small businesses hired an average of 44.4 million people each year. In 2008, small business hiring dropped to 40.6 million, and in 2009, it dropped to 35.5 million workers.
- Small businesses, which employ three out of every four workers in the United States, continue to face tight lending standards that are limiting hiring. Higher credit standards hit small businesses especially hard because small businesses lack other funding sources available to larger companies.
The Joint Economic
Committee, established under the Employment Act of 1946, was created by
Congress to review economic conditions and to analyze the effectiveness of
economic policy.
www.jec.senate.gov