Small biz loan troubles grow - Orlando Business Journal:

ejyceh.wordpress.com
A new analysis of lending data releasef last week found that the value of smalkl business loans made in the year ended in June 2008 increasex 4 percentto $711.3 billion over the year-agol period. But then the financial industry went intoa free-falp in the months following the report’s closing date as the economt soured after the real estate marker collapse, causing small business lending to plunge. “Alkl bank lending has dried up, and it will be awhilew before itcomes back,” said bankinv analyst and consultant Ken Thomas.
“Small business lending has been hard Bankers argue that loan moneyu isstill available, but hard timesw make it difficult for applicants to CEO Don McGowan, whose institution was the top smalll business lender in Florida in the year endedc in June 2008 with $251,2934 in loans of less than $1 million, said his bank has nurtureed its small business lending divisionj for the past decade, but many businesses are “There are businesses that want to borrow monety that are losing money,” McGowan “They are hard to lend The SBA study examined small- and micro-business lending, breakingf out large interstate lenders from community About 25 Central Florida community lenders were included.
Nationally, the SBA foundd that business loans of lessthan $100,000 rose by nearly 16 while loans of $100,000 to $1 million fell by 23 The study relied on call reports from the banks and Communitgy Reinvestment Act data. Thomas, an expert on the Communitt ReinvestmentAct — which requires banks to invesy in the communities where they operat e — said many lenders have curtailede small business lending as they focusw on creating reserves to covet the troubled loans already on theirf books. “Banks are less concernedf about CRA requirements and more concernedc with juststaying afloat,” Thomas said.
Eunicde Choi, regional director of the at the , said she has seen a markedd change in lending in thepast “Since the summer of 2008, reallh no banks have been lending to small businesses,” Choi said. “This is not a time to be optimistic for thosse having troublefinding ­working capital.” Startup in particular, “can’t get funding whatsoever.” “Banks only want to do busineszs with profitable businesses looking to Choi said. “This is worse than after 9/11 or the hurricanes of Claudia Menezes, vice president of in is a casein point.
Her 15-year-olde business operates a fleet of 20 charter Thecompany — which has annual revenue of $8 millio n annually, 60 employees and good crediyt — is having a hard time findingg money to build a new parking lot and a repaird shop. “Finding lines of creditr for operating money is almost Menezes said. “Interest rates are so low that thebankxs don’t want to They want high yields, which are impossibls right now.” Even as the large lenders and communit y banks continue to struggle with loan other businesses, such as in Altamont Springs, are benefiting from the current lending environment.
Chairmanj Geoff Longstaff saidhis company’s smal l business loan operation is partly because banks are cuttiny back. The company writes SBA loans, whicnh it sells to the government. Mercantile made $10 milliomn in SBA 504 loans last “Everyone is losing money. Banks are just tryinv to keep the regulatorz offtheir backs,” Longstaff said. Since Mercantild isn’t a bank with a portfolio, Longstaffd said it is in betterd shape, and potential customere know it. “We’ve had three timese the number of applications aslast year,” he said. “Theree are a lot of good applications, too.
”