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Why is Small-Business Lending Down $15 Billion?
Lending by big banks dropped 4.9 percent in the first quarter of 2011, according to a new report.
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Bank lending to small businesses fell a dramatic $15 billion in the first quarter of 2011, according to a new report by the Small Business Administration.Nominal small-business loans outstanding have now declined to levels below those reported in June 2006.
Small businesses are struggling to secure loans from banks, as the number of loans fell 2.4 percent in March, nearly double the decrease between the third and fourth quarters of 2010.
Big banks are turning small businesses away at the greatest rate -- their lending to small businesses decreased by 4.9 percent in the first quarter. Small-business owners have better luck with midsize and small banks, which have maintained steady rates of small-business lending despite the economy.
Victoria Williams, an economist with the SBA, noted that "lending could be down because small-business owners are not asking for loans."
"They could be working on paying down existing debt and not taking on more," she added.
(For more on the current lending state of the SBA, check out our interview with SBA Administrator Karen Mills, who fielded questions from our Board of Directors.)
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Comments (Page 1 of 1)
I'm a young woman, certified HVACTechnican. I would love to start my own business in the field. I just don't know how to get started. Can anyone out there answer this question for me? Thanks for your positive input.
Alicia, I have a story that you may be interested involving SBA loans and issues to look out for. I think it would make a good story based on the fact that it deals with a variety of topics (Bank Fraud, Whistle Blowers, Government Corruption, Identity Theft, Harrassment, and Death threats). Reply back and I would like to set up a time to discuss.
Victoria Williams, an economist with the SBA, noted that "lending could be down because small-business owners are not asking for loans."
or it could be that the large banks are sitting on cash and not lending it to small businesses. We have survived on cash flow and smaller growth than we would like, but have been forced to by JP Morgan Chase. We survive in spite of them not because of them.
Helloooo!! The SBA doesn't have a clue. Small businesses are struggling more than any other group of businesses. It's not as much about small business owners not taking loans, more likely there are very few banks of any size making small business loans. Add this on top of the increase burden that will be added because of ObamaScare and small business owners are just giving up. Oh...unless you are a minority owned business providing services back to the government.....then the gravy train is flowing big money!!
They never started back lending. If you get a line of credit, you have to back it up with your own cash, Then pay intrest to have the loan. Thanks!
Victoria Williams best get her body out into the public sector and verify that the small businesses are not looking for loans. That is an absurd statement. All you got to do is go and try to get a loan for anything. No bank in Okeechobee County Florida, and this includes BofA, is lending money to buy agricultural property. It's worse when one realizes that Okeechobee County is 90% agricultural (Cattle, Dairy, Citrus). So these folks don't have a bank to support their business.
What happened to the 700 billion dollars that was given to the banks to be lent out to small business and property owners under foreclosure?
Not being too political, I can only point to the present administration and ask, "What the hel are you doing about this?"
Victoria Williams best get her body out into the public sector and verify that the small businesses are not looking for loans. That is an absurd statement. All you got to do is go and try to get a loan for anything. No bank in Okeechobee County Florida, and this includes BofA, is lending money to buy agricultural property. It's worse when one realizes that Okeechobee County is 90% agricultural (Cattle, Dairy, Citrus). So these folks don't have a bank to support their business.
What happened to the 700 billion dollars that was given to the banks to be lent out to small business and property owners under foreclosure?
Not being too political, I can only point to the present administration and ask, "What the hel are you doing about this?"
The great stimulus boondoggle helped the US and foreign banks plus teachers pensions and auto unions (for Obama votes). These funds were from printed money and stolen money(high taxes) from business. The banks won't lend it out but pay themselves large salaries. Our business bank,after 22 years in which they made a lot of interest money, tried to make us go SBA even though we had paid off a large amount of a property loan(a lot of equity resulted)and line of credit. All small business is looked at as shakey because we cannot get our money at the point of a gun like the IRS can.
We have to earn it.
We switche banks for a conventional loan.
Dave
All the hype about small business being the road to economic recovery is a pipe dream.
Unless products SOLD in the US are subject to the same constraints as products MADE in the US, there will be no job creation in the United States of significant effect.
It could be that just requiring products SOLD in the US be made with the mandated Federal Minimum wage would allow some portion of domestic production of goods and services to be revived in the US.
If products SOLD in the US were subject to Environmental and Safety (OSHA) mandates, even more US jobs would be created. If all US mandated constraints on domestic production were required by offshore producers, the US could possibly be the economic power house it was in most of the 20th Century.
I submit that unless repressively low wages are not tolerated for products SOLD in the US, there can be no economic recovery.
There is no amount of technology that can overcome $14.00 a day wages in effect for many offshore products sold in the US. There is no amount of tax reduction for US manufacturers that will make up for the above advantages of offshore products.
We must level the playing field if the US is ever to create a significant number of jobs again. Many Lawmakers and Economist say that tariffs on offshore production are counterproductive. Yet these same people put tariffs on domestic US production in the form of the above mentioned constraints. They certainly are right that such tariffs are counterproductive to domestic US Production. In fact, such tariffs have just about ruined the US Economy.
If there are some US citizens that think it would be foolish to pay more for the products that can be made cheaper by offshore producers, take a look at the loss of home values, unemployment payouts, budget cuts and 401Ks. Add these amounts to the cheap imports you think were bargain prices.
Ed Avolio