Credit Crunch Impacting Job Creation

Last week, the Labor Department reported that employers had created 120,000 new jobs last month. That’s good news, but it’s not quite as amazing as it could be, and part of the problem is small business access to credit.

It’s a familiar story you may have heard in the past. Many businesses are in a place where they could actually be creating more jobs because they have an increasing customer base. However, without the access to loans they need to expand their companies, that’s just not possible.

One of the biggest problems is that the credit scores of many took an unnecessary hit when big banks began looking solely at computer generated reports on default potentials instead of the real risks involved with some consumers.  That led many banks to decrease credit lines, which then plummeted the credit scores of thousands. For small businesses, once the good credit ratings were gone, so too was the potential for the loans necessary to grow their companies.