In the financial year 2008 the small business administration loans have decreased to 38% compared to the prior year that showed good percentages. This decline is once again a record breaking figure comparatively and on an average it is falling by 30,000 every year. Lending rates have declined enormously and loans are not an easy pick anymore for small businesses.
Companies are going in a continuous loss and the agency providing small business administration loans went in to a $1.64 billion loss lately and the 504 loan programs have declined by over 16% since the financial year 2007. The government has put a full stop to subsidies as well and their lending policies have tightened. But obviously the current situation shows that improvements are not likely to occur in the near future since the Small business loan Administration has already suffered a loss and they are at a risk themselves thus the lending programs for small businesses is not going to flourish for a long time. The flow capital is also restricted which is another pertaining problem to the already bad situation in the economy. Thus the economic conditions have tightened the lending policies and this has had a major effect on small businesses and start ups. The cost of capital as shown in Figure 3 (U.S; 2008) in the appendix has also increased recently. The Federal Open Market Committee has confirmed the increasing inflation.
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