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Lending to U.S. small businesses declines

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Lending to U.S. small businesses dropped during the third quarter with net borrowing decreasing by $162.7 billion at an annual rate from July through September, according to www.bloomberg.com. That marks the seventh consecutive quarterly decrease.

However, it was the smallest decline of the contraction in lending to small businesses, which began during the first three months of 2009. Additionally, sales expectations at small businesses turned positive for the first time in five months in October.

Still, the value of small businesses' assets has fallen, and it is more difficult to qualify for loans. This significantly affects the economy considering small businesses account for 60 percent of job creation.

Meanwhile, borrowing by larger businesses increased by $328.5 billion at an annual pace during the third quarter. Companies had a record $1.93 trillion in cash and other liquid assets and spent more on plants and equipment. The financing gap reached $127.9 billion, which is the highest in at least two years.

The Obama administration has been trying to take action to fuel small-business recovery. In September, Obama signed legislation that included $56 billion worth of tax cuts over 12 months and $30 billion program to boost lending.


12/29/2010

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