Underscoring the importance of passing the small business jobs legislation this week (H.R.5297), a new report by the Joint Economic Committee shows that lending to small businesses has declined in 2010, small business hiring remains flat and the smallest firms continue to reduce hiring.
The report, entitled “Small Business Employment: Bank Lending Restrains Job Creation,” uses an unpublished data series from the Bureau of Labor Statistics to update the JEC’s May 2010 report analyzing small business hiring between January 2001 and March 2010. The update, which includes data through May 2010, shows that small business hiring has not yet started to increase.
This week the Senate considers legislation that will create 500,000 small business jobs and extend much-needed tax cuts to middle-class families and small businesses. Yet Republicans continue to stand in the way of America’s recovery and continue to oppose this job-creating bill. The new report from the JEC illustrates clearly the cost of Republican opposition to this legislation.
Major Findings of the JEC report:
� The number of small business loans and the dollar value of these loans are both dropping. The number of loans made to small businesses, which peaked at 27.2 million in the second quarter of 2008, has fallen by over 4.8 million since then, a drop of 17.8 percent. The total value of those loans fell by $60 billion to approximately $650 billion.
� The smallest small businesses – those with fewer than 50 employees – continue to see declines in hiring, even as large and mid-sized firms began to increase hiring in mid-2009.
� Overall, small business hiring remains well below pre-recession levels. In the years leading up to the recession, small businesses hired an average of 44.4 million people each year. In 2008, small business hiring dropped to 40.6 million, and in 2009, it dropped to 35.5 million workers.
� Small businesses, which employ three out of every four workers in the United States, continue to face tight lending standards, which is limiting hiring. Higher credit standards hit small businesses especially hard because small businesses lack other funding sources available to larger companies.
A copy of the JEC report is available here.
The new data provide a compelling argument for additional actions to spur lending to small businesses, enabling them to create jobs and reduce unemployment. We call upon the Republicans to join us in passing legislation that combines much-needed tax credits, enhancements to Small Business Administration (SBA) lending programs, and the development of new community bank lending facilities. This fully-paid for jobs bill targets the unique needs of small businesses and community banks, giving them the tools they need to help sustain our economic recovery.