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Recessions are never good news for any business or consumer. But as governments discuss how to bail out major financial institutions
and the automobile industry, small businesses are finding it more difficult to get access to credit - and that has serious repercussions for all of us.
Small businesses are the economic engine of the economy and credit is their lifeline. According to Discover Watch Small Business report,
companies that employ fewer than five people make up 22 million U.S. businesses and generate more than a trillion dollars a year.
Nearly two-thirds of Americans work in small businesses. For many new immigrants, opening a store or going into business for themselves is the first
step toward social integration and financial success. Small businesses also help to lift marginalized segments of society. Some of the fastest-growing
sectors of our economy are small businesses run by women, Hispanic-Americans and African-Americans.
Extending credit to small businesses can fuel economic expansion and do more to dig an economy out of a recession than offering huge bailouts to
financial institutions. Yet, when banks tighten the purse strings, small businesses are almost the first to be hit. Financial institutions are more
skeptical of lending money to fledgling ventures and the self-employed because they have little guarantee that the business will succeed and the
businesses often have little collateral for the banks to collect on if the business fails.
Small businesses also typically rely on credit more than their larger counterparts. Many small businesses use modest business loans and credit cards
to finance daily operations as well as invest in new equipment and technology. Without credit, small businesses often can’t grow as fast as they would
like. Without the loans from the bank needed to grow, some have been forced to turn away orders and new clients.
When small businesses fail, or are forced to cut back on operations, it can have a ripple effect throughout the economy. It's no wonder some advocates,
including former Democratic Presidential candidate John Kerry, have been urging the federal government to do more to protect access to credit for small
businesses during these difficult economic times.
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