Why can’t small businesses get financing? Keeping the cap on credit union lending maintains an economic barrier to competition that protects banks that are “too big to fail” and maintains the bank’s 95 percent market share of small business lending. But banks are not lending. Last year, banks rejected 60 percent of small business loan applications, and they reduced small business loans by 20 percent during the last recession. Given the upside-down real estate market, small businesses cannot substitute for home equity loans. Without capital, small businesses do not expand, entrepreneurial dreams are put on hold and jobs are not created.
Small business expansion is the key to sustaining future economic growth, accounting for 60-65 percent of jobs created in previous cyclical rebounds. The currently slow economic expansion and stubbornly high unemployment rate are in large part due to the inability of small businesses get adequate access to capital for investing and expanding operations, and that is slowing job creation.