Amidst a slowly recovering U.S. economy, Chicago small business owners remain concerned about their inability to get financing.

Austan Goolsbee, chairman of President Barack Obama’s Council of Economic Advisers, acknowledged their concern at a breakfast meeting Wednesday at the Hyatt Regency Chicago. Tailoring his message to the 150 entrepreneurs in attendance, Goolsbee highlighted the role of private-sector innovation in economic expansion.

“The role of new firms and innovation in the U.S. economy has always been quite exceptional compared with every other country in the world,” said Goolsbee, a former economist at the University of Chicago.

Citing the most recent information available, Goolsbee noted that from 1993 to 2007 new companies added 40 million jobs. The rate of hiring and innovation was severely hampered when credit to small business was frozen at the height of the recession.

But small business owners told him that the stimulus money used by the government to bail out banks in 2009 has yet to make it into the hands of business owners. The small business owners also were concerned with the continuing effects of contracted lending.

“Uncertainty makes it difficult for businesses to plan properly,” said Thomas Starshak, whose family owns a financial consulting business in Chicago. “Lenders are hung up on very selective standards.”

Goolsbee recognized that small businesses are a driving factor of economic growth, but they have lagged the recovery of the overall economy due to constricted credit. He pointed to initiatives like Startup America, a coalition of resources supported by the White House to help entrepreneurs start and scale up small businesses. Another program aims to remove barriers to the acquisition of patents.

“They could be doing so much more for small businesses. Our hands are tied,” said Michael Regan, owner of TranzAct, a freight and transportation company in Chicago.

The overall message Goolsbee brought to the event jointly hosted by the Chicagoland Chamber of Commerce, The Chicago Bar Association and The Economic Club of Chicago was positive. He pointed to seven quarters of gross domestic product growth, job creation in the private sector and the resurgence in the industrial Midwest as signs the U.S. economy is transitioning out of “a rescue phase into a growth mode.”

More broadly, Goolsbee addressed the burgeoning U.S. deficit and the debt ceiling.

“To hit the debt ceiling is like trying to lose weight by cutting off your head,” warned Goolsbee.

Goolsbee opined that politicizing the issue would do little to solve the underlying problems. Tying further spending cuts to raising the debt ceiling does not change long-term expenses such as an aging population, inflation in health-care costs and tax structure changes in recent years.

“The short-run deficit of the last two to three years was caused by the worst business cycle since 1929,” said Goolsbee. “Much of that is going to go away as the economy recovers; the long-term issues will remain.”