Does Small Business Need a Financial Fix?

Although by most conventional economic standards the recent recession is two years past, the health of the economy remains a concern to policymakers. The slow pace of the recovery and the attendant lack of employment growth have led to the perception that a shortage of credit, especially bank lending, is part of the problem. As the story goes, the small business sector, considered a major source of job creation in our economy, is stagnating, largely because of a credit crunch. Shortages of bank credit tend to hit small businesses particularly hard because banks have traditionally been the major source of funding for this sector.