A recent article by the Federal Reserve Bank of New York confirms that the recession was especially hard on small businesses. Researchers found that from December 2007 to December 2009, jobs declined by 10.4% in businesses with fewer than 50 employees, compared to a 7.5% decrease in larger businesses. Generally, small firms lost a greater percentage of jobs than large firms regardless of business sector. Manufacturing was an exception, with relatively uniform losses across both small and large firms.
According to the article, the major difficulties small businesses faced during those years were economic uncertainty and reduced sales due to decreases in consumer demand. These issues certainly affected larger businesses as well, but to a lesser degree. The article also concluded that credit availability played a secondary role in explaining why small firms struggled more than their larger counterparts.
