Could the U.S. Small Business Administration be the answer to our country’s economic problems? The U.S. economy is immense, extraordinarily fluid, and yet despite an almost desperate need for financing mechanisms to fuel the small businesses that represent 99.7% of firms in the country, still faces headwinds with respect to the credit crunch that has plagued the economy since the financial crisis began in 2008.
The Banking Crisis Over 400 banks have been closed and sold since the beginning of 2008, most of which were small, and thus particularly vulnerable to the quadruple hit of falling real estate values, rising unemployment, suffocating regulatory mandates, and drastically reduced economic activity. Faced with personal and/or business cash flows slashed between 20-50% (or, in the case of the construction industry, upwards of 100%), many borrowers went bankrupt or otherwise stopped making their payments, forcing the banks to write down the loans and, as necessary, repossess or foreclose collateral that was simulaneously plunging in value. With the economic graveyard spiral continuing for years, mounting losses eventually ate away the lender’s reserves, and the banks unable to raise sufficient new capital to recover from those losses were forced out of business. As a result, significant outlets of small business financing went with them.
To read the full, original article click on this link: The U.S. Small Business Administration and its Impact on the Overall Economy | Decoded Science
