Watch CBS News

Job creators face roadblocks

The economy added more than 100,000 last month, but that wasn't enough to budge the unemployment rate off of 9.1 percent. Historically, over the last 15 years, almost two-thirds of new jobs have been generated by small businesses. But now businesses that want to hire new workers are being frustrated by banks that cut their access to credit. CBS News correspondent Russ Mitchell examines the issue.

Ohio entrepreneur Kimberly Martinez saw opportunity in a post 9/11 world where ID badges have become a part of the working wardrobe

"Instead of wearing that shoelace style lanyard given you by Marty in security," she says, "we create fashion accessories that let women wear their IDs with style."

Martinez built Bonitas International from the ground up eight years ago, using credit cards and the equity in her home. Today she runs a $2 million enterprise with 15 employees.

"Last year we had our second best year in our company's history," she said.

But growth and new hiring stalled when credit got tight -- despite an excellent payment record, which CBS News has reviewed.

CEO: Economy's too shaky to gamble on more jobs

Here's what happened: Before the financial crisis, Martinez was charging around $50,000 a month for goods and shipping -- $50,000 with an $83,000 credit limit.

But then Chase Bank cut her credit limit down to around $50,000, meaning Martinez was now using nearly 100 percent of her available credit -- a red flag that caused her credit score to drop from 700 to 640, which then triggered Chase to lower her credit further to $40,000.

"I'm in a spot where I don't understand why when I've managed my relationships appropriately and responsibly, all of a sudden the credit card companies are turning their back on me," Martinez said.

In fact, 60 percent of entrepreneurs say their credit card terms have gotten worse.

Former banker Marylin Landis said bank computers don't discern between consumer and business spending.

"I have clients who have orders in hand," said Landis, "they could hire employees back immediately, if they had the cash to bring them back."

"I don't think the credit card companies have the data or the understanding to realize how significant their credit is for job creation."

Martinez added: "I'm not spending my money buying plasma TV's and going on vacation. I'm spending my money to grow my business and create jobs."

When contacted about the Martinez case last week, Chase gave this statement to CBS: "...As a standard operating practice, we may reduce lines for customers who are showing signs of increased risk."

But the next day, Chase surprised Martinez and restored her credit lines. "I'm so relieved," she said.

After two years of uncertainty, Martinez hopes her company is back on track

Now that she's got her credit limit back, Martinez hopes to hire five more people.

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.