There have been significant events and trends in finance and accounting that have affected small businesses in 2010. Small businesses are responsible for creating almost 2/3 of the jobs in the U.S. The economic trends that affect small business in 2010 have not, for the most part, been positive due to the Great Recession.

Usually, recessions are pronounced "over" when the Gross Domestic Product turns positive.


The National Bureau of Economic Research declared the Great Recession over as of June 2009. Most small businesses would not agree.

Here are ten trends that have affected small business in 2010:

1. Bank Loans Remained Scarce for Small Business

   
   Small business owners who want business loans had difficulty getting them in 2010. Why? Banks who hold commercial real estate loans have been leery of loaning money to businesses because they expect many commercial real estate loans to go into default. Bank regulators are asking bankers to improve their capital to asset ratios in order to protect depositors' money.
   
   The value of bank loans made to small business fell by over 17% between 2008 and 2010. The number of bank loans fell by $60 billion over the same time period.
   

2. Demand for Business Loans Declined

   
   Not only are loans more scarce, so is the demand for loans by small businesses. About 53 percent of small businesses did not want a loan, according to the Small Business Advocate. According to the same source, only 3% of small business reported lack of financing as their major business problem. Even when loan standards loosened a bit in third quarter 2010, according to the Federal Reserve, demand for loans from small businesses did not rise.
   

1. Alternative Sources of Debt Financing

   
   Small businesses who sought financing during 2010 often had to seek it from alternative sources. Sources such as peer to peer lending, merchant cash advances, purchase order financing, inventory financing, factoring accounts receivable, and others have sprung to the forefront as primary sources of financing for small businesses.
   

2. New Venture Capital Investment Still Low

   
   When the stock market crashed in 2008, new venture capital investment crashed right along with it. Venture capital investors are cautious about the opportunities for new business in our troubled economy. Most venture capital is going to more mature businesses. In 2010, even though venture capital investment slightly improved, it is still weak for small, particularly startup, businesses.
   

3. Small Business has had Trouble with Collections

   
   Small businesses have noticed a substantial increase in delinquent accounts during the Great Recession. When they offer supplier or trade credit to other small businesses, they are taking a risk, particularly in a recessionary economy. Credit problems and collection problems have risen. This has impacted cash flow in small businesses. Many small businesses run on a thin cash flow margin and if collections are slow, that cash flow margin can quickly turn negative.
   

4. More IRS audits in 2010

   
   The House of Representatives approved a budget increase for the Internal Revenue Service for fiscal year 2010. This budget increase authorized more employment tax and income tax audits. Thousands of new auditors were hired by the IRS during 2010. Small businesses were targeted for audits because the federal government feels like they should get more tax money from small businesses than they do and auditors were hired to check this out.
   

5. State Governments Looking for More Revenue

   
   Much of the federal aid has been cut off from state governments and they are suffering. In fact, it will be surprising if states don't need their own bailouts soon. In the wake of this, states are searching for ways to generate tax revenue and business is one of their targets. Look for more state income tax audits. In addition, many states have entered reciprocity agreements regarding the Internet usage tax.
   
   The issue of whether online companies should have to collect sales tax revenue for states has been around for a long time. Now, states are doing something about it. Some are sending letters to businesses and individuals, after they receive reports from other states with which they have reciprocal agreements, billing them for usage tax for any out-of-state purchases they've made from online companies.
   

6. Borrowing by Small Business Using Business Credit Cards has Increased

   
   Entrepreneurs looking to start up a business are increasing using their credit cards to fund their startups. They find they have no where else to turn. Other small business owners, even for mature businesses, have had to turn to credit card financing in 2010 to keep their doors open due to tight bank lending conditions.
   

7. Slow Sales, Low Loan Demand Means Less Hiring

   
   The unemployment rate in the U.S. has hovered between 9.5% and 10% during 2010. It only dropped into single digits when a number of census workers were hired. Private sector workers are slowly being added but too slowly to make much of a difference. Why? Small businesses say that until their sales improve, they simply don't need to hire more workers. It becomes a vicious circle. Consumers can't buy until they have a job. Employers can't hire the consumers until they have more sales.
   

8. Tax Breaks to Improve Retirement Savings

Employees retirement accounts, particularly IRAs and 401(k)s have taken a hit during the decade of the 2000's. Investment gains have been low or non-existent. A little talked about retirement program was developed and approved during 2010. It's called the DB(k) and it can only be offered by small business with no more employees than 500.

The DB(k) is a combination pension plan and 401(k). Small businesses have not yet signed on to it because they do have to set up a small pension plan and match 401(k) contributions and most can't afford to do that. Hopefully, the DB(k) will catch on as the economy improves.

These are the top small business finance and accounting trends that have been most widely observed in 2010.