Business Lending & Financing Slammed in 2011
According to research studies, it was found that many companies who often lend funds for instance a bank or a private lender have been turning away from this in the fear that in 2012, there will be unsuccessful businesses. Business lending can be difficult to come back and it is suspected that many lenders have stopped in order to ensure they do not make a loss.
Business financing in the US got slammed in 2011 although it is still up slightly year on year. Many corporations reported a nervousness to increase borrowing and engage in new spending given increased economic and regulatory uncertainty. The number of new business loans, lines of credit and leases in the US was up 2% year on year, but down 22% from June.
Of these new loans, the majority were dedicated towards replacement costs rather than expansion. Many businesses reported that they were discouraged from investing by the congressional deficit debate chaos and the the evolving government conversation on tax reform.
Added to this, there is the uncertainty coming from global economic turmoil and unstable financial markets. The recovery remains slow and plodding, and 36% of companies surveyed actually reported a decrease in their loan activity year on year.