December saw an increase of 238,000 nonfarm private sector jobs according to the just released ADP National Employment Report. Small businesses accounted for 108,000 of these jobs, medium sized business accounted for another 59,000, while large businesses accounted for only 71,000 (or less than 30%).
Paradoxically, in recent testimony before the House Committee on Small Business Jeff Stibel, CEO of Dun & Bradstreet Credibility Corp., stated that small businesses were growing faster than large businesses but job growth in 2013 was lower for small businesses. Hopefully the December numbers reflect a change in the trend. In the last twenty years small businesses, according to Stibel, were responsible for over 2/3 of anew jobs created. Unfortunately access to capital is still a problem affecting small business growth and job creation with 66% of small business owners indicating that adequate financing is restricting growth. This comes at a time when, as we pointed out in our earlier [Delinquency Rate Blog] small business delinquency rates have hit new lows.
Wall Street Journal Online recently published a article entitled “Alternative Lenders Peddle Pricey Commercial Loans “() reports about a borrower, reluctant to deal with aggravation from a bank because of a credit score drop during the recession, turned to a non-bank short term lender and opted to pay an interest rate approaching 30% per annum for a six month loan. This raises the question as to whether small businesses can really afford the high rates as a solution to their capital needs.