“We need to think carefully about how, in the current economic environment, our nation can best provide small businesses and entrepreneurs with the support they need to expand job opportunities,” Bernanke said in prepared remarks.
Bernanke said that small businesses support their local communities while also helping the U.S. compete globally.
“They often offer a level of agility in bringing innovative products to the global marketplace that larger firms cannot match,” Bernanke said.
Bernanke also said that entrepreneurship offered “an important option for people confronting economic challenges in their lives, such as insufficient retirement savings.”
Many small businesses are still finding it hard to get credit after the financial crisis. The crisis has made small companies more vulnerable and banks more cautious in giving out loans to them. A Fed survey this week showed that fewer banks relaxed lending standards to business in the third quarter–especially to small companies.
Bernanke said Nov. 2 that the Fed stands ready to buy more mortgage-backed securities to aid an economy that’s expected to remain weak for many more years, but he declined to commit firmly to such a move. The central bank last week refrained from taking new unorthodox steps to spur growth after taking them at previous meetings in August and September.
Small companies were more optimistic for the second month in a row in October as a bigger share of businessmen said they expect the economy to improve over the next six months, a survey showed Tuesday. But it was less pessimism that really moved the needle–not an increase in optimism. The level of the optimism index published by the National Federation of Independent Business (NFIB) is still close to levels associated with recession and remains below last spring’s level.
Small companies’ expectations of sales growth and business conditions stayed in negative territory, the NFIB survey showed. Hiring prospects also remained dim last month, with only 3% of firms saying they plan to add employees to their workforce, down one percentage point from September and in line with the weak average seen over the past six months.
“Consumer sentiment remains at very low levels and is reflected in the 26% of small business owners who cite ‘poor sales’ as their biggest problem,” the NFIB said earlier this week.