A headwind, not a show stopper
Posted on November 10, 2009 at 12:48 pmAtlanta Federal Reserve President Dennis Lockhart says commercial real estate’s slump will last as long as job creation limps along. But he doesn’t see the sector causing another downturn, though its struggles will affect small-business lending.
Unlike residential real estate, there is not the same direct linkage from CRE to household wealth - and therefore consumption - caused by erosion of home equity. However, there could be an impact resulting from small banks’ impaired ability to support the small business sector - a sector I expect will be critically important to job creation.
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But that’s ’cause most of them pinch the penny so tight…
Posted on at 8:12 amThe latest Fed survey of banking conditions won’t do much to put credit-strapped small businesses at ease.
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Yeah, this won’t help
Posted on November 2, 2009 at 7:55 am
The somewhat expected bankruptcy filing of CIT Group looks set to further reduce credit options for small business.
CIT’s factoring business, worth about $42 billion in 2008, is estimated to be at least five times the size of its closest competitor, Wells Fargo & Co, followed by other smaller companies such as GMAC Inc and Rosenthal & Rosenthal. It is not clear if these rivals have enough capacity to take on all of CIT’s existing customers.
SEE ALSO: The company’s official restructuring site.
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Banks are hurting small biz’s growth potential
Posted on October 12, 2009 at 9:38 am
Two related bits of info and analysis on the scope and repercussions of banks’ continued tightening of credit. The latest Fed numbers show outstanding commercial and industrial loans have dropped by some $250 billion in the past year. That has been most painful for small businesses, which can’t hit up the bond market to raise capital and create the jobs they have traditionally created coming out of a recession. Or in econospeak:
It’s not clear whether small businesses will continue to play their traditional role in hiring staff and helping to fuel an employment recovery. However, if [...] financial constraints are a major contributor to the disproportionately large employment contractions for very small firms, then the post-recession employment boost these firms typically provide may be less robust than in previous recoveries.
SEE ALSO: Via Milt Capps, a potential solution that would vacuum up leftover TARP cash.
Small biz gets no credit
Posted on July 22, 2009 at 2:08 pmThe good news: The National Small Business Association says the number of small-business owners who think the economy will grow in the next year has more than doubled since December. The bad news: The number jumped from 3 percent to 7 percent and many of the business who could use a financing boost likely can’t get one.
There was, however, an increase in the number of small-business owners who used a traditional bank loan in the last 12 months. While a positive indicator that bank loans are an option for some small businesses, this increase also reflects the fact that more businesses are turning to outside sources of financing as the difficult economy has forced them to use up business savings and earnings—making access to affordable capital all the more important.
SEE ALSO: A report from federal regulators that says almost 90 percent banks are tightening the loan underwriting standards.
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Before the meltdown
Posted on May 27, 2009 at 4:31 pmThis time next year, these numbers — pointed out to us by Jeff Cornwall — will be a lot more interesting. For now, consider them a pre-financial crisis baseline.
The chart below shows the top small-business lenders in Tennessee in the year ended June 30, 2008 based on data collected under the Community Reinvestment Act. The figures in the first column depict the dollar volume, in thousands, of loans made by each bank. The right column is the number of loans made.
More stats and research reports from the SBA are available here.
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