There are signs that the formation of new companies in the U.S. economy is lagging. The number of business applications for startups likely to hire employees and have payroll are 16% lower than they were in 2007, according to data from the U.S. Census Bureau.
Among the reasons: banks are stingier with credit to small businesses, as new rules after the Great Recession define small business loans as riskier, said James Angel of the McDonough School of Business at Georgetown University.
It’s also easier today to start a company without any full-time employees, as the gig economy allows entrepreneurs to “rent” talent one gig at a time, said Jerry Davis at the University of Michigan’s Ross School of Business.
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