This is the third in a series of articles based on a Harvard Business School working paper by Karen Mills that analyzes the current state of availability of bank capital for small business.)
Access to credit is critical to the success and job-creating ability of America's small businesses. But small business credit was hit hard during the recent recession and has been slow to recover. Beginning in early 2009, the federal government acted quickly to unfreeze credit markets with programs ranging from loan guarantees to capital infusions and regulatory changes. A number of these were extremely effective and also efficient in their use of taxpayer dollars, but most were not meant to be permanent.
Currently, as described in the HBS working paper The State of Small Business Lending, gaps persist in certain areas of the small-business market, and regulatory overhang continues to create pressures on small business credit.
GOVERNMENT STEPS TO LOOSEN CREDIT
Three landmark pieces of legislation passed between 2009 and 2012 were aimed at, first, responding to the immediate impact of the financial crisis on small business and, second, driving economic recovery in the years following. Together, the three-the American Recovery and Reinvestment Act of 2009 (Recovery Act), the Small Business Jobs Act of 2010, and the Jumpstart Our Business Startups Act of 2012 (JOBS Act)-leveraged effective federal programs that already existed, while also taking action in some new areas.
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