Small Businesses Stumbling Block For Economic Recovery

(MYFOX NATIONAL) – While Wall Street greed gets the blame for causing the Great Recession, small businesses are becoming the next culprit of hard times.

Layoffs and scant capital spending among businesses with less than 500 employees are dragging down the recovery, according to a report by Bloomberg .

And for many small businesses, the weight of the economy is bearing down on them.

Businesses with fewer than 50 workers eliminated 12,000 jobs in December, reported payroll processor Automatic Data Processing . Meanwhile, businesses with fewer than 500 employees shed 3,000 jobs in January, ADP reported .

Cary Leahey, a former White House economist now a senior managing director at Decision Economics Inc. in New York, told Bloomberg : "Will you have a sustainable recovery a few years down the road without getting some small-business spending? No. Wall Street," he said, "gets it."

The Obama administration has acknowledged the struggle of small businesses. The president has said he wants to create a Small Business Lending Fund with $30 billion transferred from the Troubled Asset Relief Program. He also supports $33 billion in tax cuts for small companies and incentives for hiring and wage increases.

But the sour economy has actually been good news for one sector of small business: foreclosure clean up companies.

These are the crews who clean up leftover debris and trash as well as paint foreclosed homes for brokers and investors after the homes have been seized by lenders. The presence of so-called "trash out" companies abounds on the Internet, from franchise opportunities to even a TV series on the foreclosure process called "Foreclosure Boys."

There's no hard data on how many of these small businesses have sprung up during the past few years, but the widespread need for their services is evident in the rise of foreclosures.

One in 45 homes -- or 2,824,674 properties nationwide -- was in default in 2009 , according to RealtyTrac, the online marketer of foreclosed homes. That figure is up 21 percent from 2008 and more than double 2007's total, the group said.