Survey: Small business senses recession

Small businesses across Minnesota may not have many economists in their ranks, but almost three out of four businesses say the economy has slid into a recession, according to a new survey done on behalf of U.S. Bancorp.

But the same poll found 78 percent reporting that obtaining credit was not among their problems.

About half said their revenues have slumped this year compared with last, but they also expect sales to hold or rise next year.

"The fact that we had such a high proportion that sees us in a recession -- that seemed high considering the quality of Minnesota economy compared to some other states where we do business," said Rick Hartnack, U.S. Bancorp vice chairman.

Small businesses offer an on-the-ground perspective often missed in economic statistics, Hartnack said. The fact that so many view current conditions as a recession is hard to dismiss, he added.

"The magnitude of that is quite interesting," he said. "I don't think you'd find many situations where 74 percent of small businesses think we're in a recession before we are."

The telephone survey of 401 Minnesota businesses with less than $10 million in revenue was conducted June 10 to 12. It was the first of what the bank plans to be an annual survey. The survey was conducted by KRC Research.

U.S. Bancorp, which claims more than 71,000 small-business customers across Minnesota, commissioned the survey as a marketing tool. Hartnack called it an effort to increase the bank's knowledge of and advice to small businesses.

In his view, one of the survey's bright spots was the fact that just 27 percent of the small-business operators said obtaining credit was difficult.

"It's a good thing for the economy," he said. "If businesses perceive they don't have credit, that stifles investment. That would make this recession deeper and longer."

Some banks, facing their own financial troubles, may have dialed back credit lines in recent months, but that doesn't translate to a credit crunch, Hartnack said.

"Minnesota small-business owners are savvy and know there [is] a range of credit options available to them, from direct loans to business credit cards and federal loans," he said.

Urban small-business owners may have had an easier time with their lenders than rural companies, though. In the survey, 37 percent of Twin Cities-based firms said access to credit was easy, compared with just 26 percent of small businesses in the rest of the state.

Clearly, money going out the door was of more concern than credit conditions.

Eighty-five percent of the business owners said high gasoline prices have hurt their firms. Two-thirds said fuel prices had a "very negative" effect on business.

Other downdrafts for business, according to those responding, were state and local taxes (48 percent said they were a problem); federal taxes (41 percent), and the housing market (40 percent).

One business owner summed up the general mood this way: "Gasoline prices, food prices -- the market is just terrible."