Small business borrowing woes hurt jobs: NYSE CEO
NEW YORK (Reuters) - A majority of U.S. small businesses are having a tough time accessing funding, holding back job growth and stunting economic growth, Duncan Niederauer, chief executive of NYSE Euronext, said in an interview.
New York Stock Exchange parent NYSE released the results of an annual survey on Monday on the economy, business and job creation. It included 340 CEOs from companies listed on NYSE Euronext markets from 26 countries, and 285 U.S. small business owners.
It was the first time in the survey's eight years that Main Street business owners were included, and 47 percent of them said their capital needs were being met marginally or not at all. Just 21 percent said they have sufficient capital.
Niederauer, who was active in promoting the Jumpstart Our Business Startups Act, or JOBS Act, said that anecdotally he had been hearing for the past couple of years that small business has been having a tough time raising capital.
"Our early sense is that the lack of access to capital is having the biggest impact on job creation," he said.
Two-thirds of the small businesses, which Niederauer called the U.S. job creation engine, do not expect add jobs in 2013, or will be cutting jobs, according to the survey.
Banks are less willing to bet on small businesses than in the past, especially on newer ones that have not yet built a strong credit history, Niederauer said.
Small businesses less than 10 years old have had almost twice as much difficulty in accessing capital as companies that have been in business for over 25 years, the survey found.
Concern over future economic growth, and the amount of costs related to red tape when preparing loans for small businesses, have also put a damper on lending by banks, Niederauer added.
"There is not much profit in a $100,000 loan if you are going to provide that capital at an affordable price, and yet there is a tremendous amount of work that has to be done to make that loan," he said.
The story was slightly better for large global companies, with 43 percent of CEOs saying their need for capital is fully met, while 20 percent said they do not have enough.
But the study suggested that is leading to a spilt-level recovery of the economy, with large companies growing while smaller ones struggle.
There was a disparity between the two groups' thinking on the U.S. economy, with 69 percent of the CEOs of public companies saying conditions were fair, 20 percent saying conditions are poor, and 11 percent saying they are good.
Just under half of the small-business owners saw U.S. economic conditions as fair, 39 percent saw them as poor, and 12 percent said they were good.
"If that all translates to minimal growth and hiring, then that to me is the call to action," Niederauer said.
Aside from its support of the JOBS Act, which was enacted in April and makes it easier for young companies to raise money while reducing regulatory burdens in the startup phase, the Big Board parent in May launched The NYSE Big StartUp, which provides small businesses with micro-loans and mentoring.