Posted by Mike Smith :: October 6, 2008 @ 11:22 am

It seems that 2008 will likely be remembered as the year of the bailouts. Such a generalization loses sight of the fact that only big businesses are getting government help. Not only are small businesses not getting bailed out, but their options are also shrinking as credit tightens.

The National Small Business Association recently released its 2008 Small-Business Mid-Year Economic Report, which included the results of an August 2008 survey of small business owners. A full 67% of small business owners surveyed responded that their businesses had been impacted by the credit crunch. As credit tightens, banks generally favor their largest account holders. So while large corporate customers are still able to borrow money to a certain extent, small business funding is drying up.

The survey also discussed the difficulties faced by small business owners as a result of FDIC insurance limits. 68% of small business owners found the $100,000 FDIC insurance limits inadequate to cover their business accounts. By providing inadequate protection of small business deposits and expensive (or unavailable) funding for financing needs, banks continue to hurt small businesses in a number of ways.

Small businesses can’t count on government bailouts to help them when they run into trouble. Small business bailouts are do-it-yourself. Traditional banks are unlikely to help. Fortunately, social lending continues to grow and serve the needs of the small business community at this most critical time. With low operating costs and lenders more than willing to fund exciting small business projects, P2P loans may prove to be a major catalyst in stimulating the economy in a meaningful way.

Is your small business hurting? Have P2P loans come to your rescue? Please share your experiences with the community perfectly suited to serve your small business funding needs.