Start-up activity down in first half of 2010

Creation of new businesses fell sharply in the first half of the year, according to a report released today by global outplacement firm Challenger, Gray & Christmas Inc.

A Challenger survey found that 3.7 percent of job seekers chose to start their own businesses in the first six months of 2010, a substantial drop from a 7.6 percent rate for the same period last year.

A variety of reasons are responsible for the decline in entreprenurial activity.

“It is difficult to pinpoint the exact reason behind the decline in start-up activity among former managers and executives. On one hand, it could be that the job market has improved to the point that many do not feel compelled to take the risk of going it alone. Then there is the fragility of the recovery and the uncertainty that comes with it. Many small business owners are increasingly pessimistic about business conditions and still find it difficult to get a loan,” Challenger CEO John A. Challenger said.

Challenger’s report is both understandable and disturbing — understandable that some would-be business owners are being cautious but disturbing that access to capital remains a big problem.

Lenders — many of who were rescued by taxpayer bailouts — need to unclinch their fists and start making loans.

Read the full Challenger report here.