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BusinessWeek: January 18, 1993 |
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Economic Trends
A CREDIT CRUNCH? FOR SMALL BUSINESSES, IT'S YET TO COME In reality, says the NFIB, "a decline in the demand for credit by small business has been misinterpreted as a restriction of supply." Because of low inflation, high profits in the mid-1980s, and the recent slowdown, many owners have felt little need or desire to borrow heavily. In fact, NFIB surveys in recent years indicate that financing woes loom relatively small in small businesses' assessments of their problems. "The real risk of a credit crunch," says NFIB economist William Dunkelberg, "lies in the soon-to-emerge private demand for loans." Once the expansion accelerates, there will be a surge of bankable deals, which will strain the financial system. The combination of heavier regulation, nervous bankers, and rising private-sector credit demand, he warns, could then produce a "truly serious credit crunch for small business." | |
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