Word: creditable
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There are plenty of reasons to believe that small businesses aren't getting the credit they need. In the last three months of 2009, business lending at smaller banks, which tend to cater to smaller companies, was down at a 13% annual rate, according to the Federal Reserve. Not only are loans harder to come by, but they're also more expensive. That has the potential to slow down economic recovery, since firms that can't borrow often can't expand. Policymakers have responded with a number of programs to boost small-business lending, including an Obama Administration proposal...
Talk to business owners, though, and the picture is a lot more complicated. A poll conducted at the end of last year by the National Federation of Independent Business, a small-business trade group, found that companies were overwhelmingly more concerned about slow or declining sales than access to credit. A full 51% of businesses cited sales as their top concern, while only 8% cited the ability to borrow money. An additional 22% cited uncertainty as their biggest worry. In unstable times, even healthy companies are unlikely to want to take on debt. (See the top 10 bankruptcies...
...Obama Administration has announced loan guarantees to build new plants. United Controls is also seeing a spike in business from overseas countries such as Korea, Taiwan, Spain and Brazil. In other words, coming out of the recession, Hale's firm is a commodity in short supply: a top-notch credit risk...
...Hart’s findings? As she explains in her abstract, her research “suggest[s] that the problems in the CDO [Collateralized Debt Obligations, for the non-ec types out there] market were caused by a combination of poorly constructed CDOs, irresponsible underwriting practices, and flawed credit rating procedures.” Seems simple enough. But why couldn’t someone with more experience than an undergrad offer the same insight...
...Easing the flow of credit, especially to small businesses, has also been a major policy push - and a tricky one to size up. The efficient reallocation of capital is key to any economy but especially to one like the U.S.'s, which counts on dynamism as a competitive advantage. Lending to businesses is down; that much is true. But is that because banks are overly cautious and asset-impaired or because businesses are uncertain about the future - or just aren't creditworthy borrowers? A recent survey by the National Federation of Independent Business found that companies that couldn't borrow...