Silver linings at a time of lagging optimism.

• Author: Alter, Michael
• Position: PRIVATE COMPANIES

At the end of February, it seemed the light at the end of the economic tunnel was shining a little brighter. The Small Business Scorecard, conducted by SurePayroll, revealed that 71 percent of small business owners were optimistic about the economy--the highest percentage since August 2009.

But in April the light seemed low on batteries. Small business optimism had sunk to a level not seen since October 2009, with only 52 percent of respondents expressing economic optimism. Why were February 2011 and August 2009, for example, times of heightened optimism, while April 2011 and October 2009 made small business owners more anxious about the economy?

A lot of good theories have been offered, namely the increase in gas and other commodity prices and the rise in the unemployment rate that might be contributing to the current jitters.

But historical data shows that optimism tends to ebb and flow during a recession. Until small business owners see pre-recession-level revenue and growth, optimism will continue to fluctuate, even when the bottom line hasn't necessarily been affected.

There is, however, a silver lining in this time of anxiety for small business owners. The current environment affords some advantages that can help them flourish: more access to credit, a large pool of talented labor and the knowledge that while optimism can rise and fall, other factors seem generally stable in the midst of an L-shaped recovery.

Access to Capital Sources

According to recent figures, small business lending is surging, making it an opportune time to get credit. The Small Business Administration approved $9.1 billion in small-business loans between Oct. 1 and Dec. 31, 2010--the most the agency has ever backed over a three-month period.

An April 2011 survey by Greenwich Associates of small businesses showed that 59 percent of respondents had applied for a loan within the last year. Comparatively, in the third quarter of 2010, only 5 percent had applied for loans. This figure jumped to 15 percent by end of the fourth quarter, and hit 29 percent at the end of the first quarter of 2011.

Instead of relying on big banks for credit, about half of these small- and mid-sized businesses secured loans from lenders not included in the top 20 lending institutions. If a business owner is able to partner with the smaller banks making loans to small businesses, it makes sense to pick up the phone and see what mutually...