Gimme some credit

Don't expect small businesses to do cartwheels over the economic recovery. Greenwich Associates recently found that two-thirds of 221 small businesses it surveyed are still struggling to meet financing needs and that about half reported that credit is now harder or much harder to secure than it was a year ago. Although conditions have become highly favorable over the past year for the largest U.S. companies, the financial services research firm found that access to credit has actually worsened for smaller and midsize companies. About 30% of survey respondents said that the conditions are unchanged from a year ago, when the credit crisis began to ease for larger companies. Just 15% reported that credit conditions have improved. “Many smaller companies have simply accepted the fact that credit is not an option right now and that new investments will have to be funded with retained earnings,” said Chris McDonnell, a consultant at Greenwich. Difficulties in securing affordable credit could impede the ability of businesses to grow in the year ahead, he said. About 70% of small businesses reported that they are concerned about their ability to get the financing they will need to run their businesses this year. “These figures are supported by our research showing that U.S. companies are increasingly planning to fund capital investments with cash on hand, as opposed to bank credit,” Mr. McDonnell said.