Business conditions for young companies are improving in most areas—except when it comes to access to credit.
The Kauffman Foundation and LegalZoom recently conducted their third annual survey of recently formed companies, and of the 1,242 responding startups, about 45 percent said a lack of credit was a problem for their company in 2014.
That figure hasn’t budged from 2012 or 2013. It’s somewhat puzzling because, overall, startups said conditions are improving. For example, only 46 percent said that unpredictable business conditions had hurt their company, down from 57 percent the year before.
“Though we’ve yet to see improvement on the issue of limited access to credit, we are witnessing mitigated issues on other fronts,” said John Suh, CEO of LegalZoom. “New business owners feel confident they are starting their business in a predictable economy, and expect fewer business challenges—an environment ripe with opportunity for entrepreneurs.”
About 49 percent of respondents reported no business challenges, an improvement from 37 percent in 2013.
The survey also covered the impact of government regulation. About 41 percent said they hadn’t been affected at all. Of those who had, 41 percent said the problems involved tax rules, and 31 percent reported issues involving licensing and other operational matters.
“Overall, the economic news generally is good,” said Dane Stangler, vice president of research and policy at the Kauffman Foundation. “Yet entrepreneurship rates remain on a 30-year-long decline. Lack of access to credit alone isn’t enough to explain why entrepreneurship is falling. But it seems to have some impact, and more study is needed to determine exactly what that impact is.”
