In a meeting with some of the most powerful CEOs in the world on Tuesday, President Donald Trump argued that small businesses are struggling to find financing.
“So many people come to see me — I see them all the time — small businesses that are unable to borrow from banks,” Trump said. “They never had a problem 5, 6, 7, 10 years ago. They had great bankers, great relationships, now they can’t borrow.”
The president blamed the post-financial crisis Dodd-Frank banking regulation, which was enacted in July 2010, and higher capital requirements for the largest financial institutions. Trump said he plans to “streamline” or “eliminate” Dodd-Frank to allow small businesses to borrow again.
However, Trump’s narrative is the opposite of what small business owners are saying.
In its small business optimism index released on Tuesday, the National Federation of Independent Businesses found that very few small businesses are having trouble getting access to loans, and that financing is not a major problem for their businesses right now.
“Only 4 per cent of owners reported that all their borrowing needs were not satisfied, up 1 point and historically low,” said the NFIB release. “Thirty-two per cent reported all credit needs met (up 2 points), and 52 per cent explicitly said they did not want a loan. Only 2 per cent reported that financing was their top business problem compared to 20 per cent citing taxes, 17 per cent citing regulations and red tape, and 16 per cent the availability of qualified labour. Weak sales garnered 12 per cent of the vote.”
While the NFIB did say that loan demand was weak, the release described current lending conditions as “cheap money.”
Additionally, the US Small Business Administration’s most recent report on loans said that the rate of small business lending has been increasing since 2013.
Trump may be using small business lending as an excuse to roll back the regulation on Wall Street, but according to the owners of those small businesses, credit access isn’t an issue.