Credit Squeeze? —Polischuk
It's mid-2010, and we're well along the way of climbing out of the depths of a deep recession. That is not to say that the climb has been entirely successful; it's still too early for that conclusion and there appears to be many dangers lurking (e.g., unemployment, deficit spending, European financial stability, etc.). What can be said is there have been significant actions on many fronts that have been in place for some time now. Minimally, these efforts have shored up the global economy to prevent a financial collapse.
One of the significant efforts made by our Federal Government was the $787 billion American Recovery and Reinvestment Act of 2009, which was highlighted in the April 2009 issue of packagePRINTING. In that article, I quoted the following from a press release issued by The White House Office of the Press Secretary: "The Obama Administration firmly believes that economic recovery will be driven in large part by America's small businesses, which have generated about 70 percent of net new jobs annually over the past decade." To back up these words, the Recovery Act allocated $730 million to the Small Business Administration (SBA) to help open up the flow of credit for this important sector.
Well, the printing industry—packaging and commercial—comprises a significant number of small businesses that are typical of the type these measures were designed to help. So now, after close to 18 months since the passage of this legislation, I'm wondering whether printers that needed to borrow money have benefitted in any way from the efforts to improve credit availabiliy. I still hear comments that credit is still tight in the printing arena.
On paper, it seems as though the measures put in place to open up credit would have done the trick. The cost of money for banks is low, and the Federal Government is both subsidizing some of the costs of borrowing through the SBA and shielding banks from much of the risk associated with lending to small businesses. I don't know about other areas of the country, but in my neck of the woods, I have seen a significant number of new community banks springing up. Much of the commercial construction I see is for new banks.