How bad is it?

Credit freeze hasn't hit small firms hard yet, but economic slowdown has

By Andrea Coombes, MarketWatch
Last update: 2:33 p.m. EDT Oct. 3, 2008

NFIB won't release its official September figures on credit availability until Monday, but Dunkelberg, who has analyzed the September data, said they show "just the normal progression we see at the end of an expansion. ... Credit is always harder to get then."

That's in part because as the economy slows, firms' profit picture worsens, making lenders less likely to approve requests. Also, there's no doubt lenders have tightened their underwriting standards over the past year in the wake of the subprime meltdown. But it's not clear that small firms have been particularly struck by the worsening credit freeze in September.

Ten percent of small firms in August reported they had a difficult time securing credit, compared with 3% in 2003, according to NFIB.

"That may sound like a horrible thing but it's really normal ... as [an economic] expansion peters out," Dunkelberg said. "Back in the early 1980s, 28% said it was harder to get credit."

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