Report Blames Tight Lending Standards for Weak Hiring
Although mid-size and large business began to increase hiring by the middle of 2009, small business hiring levels are well below pre-recession levels, according to a U.S. Congress Joint Economic Committee report. In fact, 2009 hiring was 20% below the annual average during the years 2001-2007.
The report, which blames tight lending for the weak hiring numbers, also found that Small Business Administration lending has dropped sharply and that the number of loans fell from 108,000 in 2007 to fewer than 46,000 in 2009.
Rep. Elijah Cummings (D-Maryland), who sits on the panel, said that the news is particularly devastating to black businesses that more often than not rely on lines of credit to stay in business.
“Clearly, the report said what I’m already feeling in my district and that is that small businesses do not have access to the capital they need and as a result they can’t take advantage of opportunities they normally would. And because of that they cannot hire people,” he said. Because of the lack of wealth in black communities, African American entrepreneurs, he added, cannot turn to relatives or other contacts for loans.
Cummings also said that lawmakers must do all that they can to encourage banks to lend more. Next month he will hold a hearing in his district with its local Federal Reserve and small and minority businesses.