The credit crisis is not over, and banks are holding back their lending in order to keep cash on their balance sheets. The value of credit held by banks in the second quarter shrank by $154bn, the largest three-month contraction since 1948. Some expect further bank lending to contract by some $600bn to $700bn.

Small businesses are being disproportionately affected. Fifty-two percent of banks reported tightening lending standards for firms with annual revenues below 50 million. Small businesses comprise of over half of the U.S. labor market and their lack of access to credit could further damage unemployment and consumer spending.

Snapshot asks, does a credit contraction have a disproportionate impact on small business and therefore the labor market?

Wall Street Journal - Businesses Feel Pinch of Tighter Lending
Investors Insight - $1.6 Trillion in Losses and Counting
Reuters - Credit Seen Drying up for Small Business
Market Watch - Small Business Funding Alternatives Sought