Small Businesses Not Hampered by 2005's Interest Rate Rises

WASHINGTON – Higher interest rates seen last year appeared not to have affected the demand for loans to small businesses, according to a recent SBA senior loan officer’s survey. Interest rates have continued to rise, with the average prime rate for 2005 nearly two percentage points higher than the 2004 average, the SBA’s Office of Advocacy reported. Meanwhile, the number of deals and amount of investment in venture capital remained steady and were quite similar to the 2004 levels. The University of Michigan’s Consumer Sentiment Survey indicated a steady rise in optimism during the fourth quarter but that had fallen to low levels after Hurricanes Katrina and Rita, according to the SBA. There were two million nonfarm payroll jobs added in 2005, with 438,000 of those stemming from the fourth quarter. Industries with the largest percentage of small business employment-construction, other related services, wholesale trade, and leisure and hospitality-added 142,200 net new jobs during the quarter. Each industry sector except for retail trade saw employment gains in the fourth quarter, the agency reported. There was a slight uptick in incorporated self-employment.