Small-business loans declining
Small-business lending continues to slow locally, as the number of loans approved by local banks under federal government guarantee fell by nearly half in October.
According to the U. S. Small Business Administration, eight lenders made 40 loans totaling $3.2 million using SBA programs last month, the first month of the agency’s 2009 fiscal year.
That’s down from 16 banks providing 78 loans totaling $8.65 million a year ago.
M&T Bank Corp. continues to be most active, with 15 loans totaling $1.56 million. But that’s down from 21 for $2.27 million in October 2007.
Warsaw-based Five Star Bank is next at 10 loans for $413,000, followed by Citizens Financial Group and First Niagara Financial Group, each with 4 loans for $356,000 and $340,000, respectively.
Additionally, four banks made one loan each, totaling $4.48 million, under the agency’s 504 program. First Niagara made the only loan to a veteran-owned business, for $65,000.
The declining numbers continue the trend from the last fiscal year ended in September, when the number of loans nationwide fell by nearly 30 percent to 69,434, while the dollar value fell by 13 percent to $17.96 billion. Loan volume statewide fell 35 percent.
SBA officials have blamed a “perfect storm” of tightened credit standards, declining creditworthiness of borrowers, and slack loan demand because of uncertainty about the future.
The agency reminded lenders that they have authority, on a case-by-case basis, to defer loan payments by up to three months for qualified borrowers who are having a hard time making payments.
The agency is also asking lenders not to broadly call in loans because of changes in personal credit scores, declining collateral values and reduced home equity.
“The SBA is here to help small businesses during these difficult economic times,” SBA Acting Administrator Sandy K. Baruah said in a press release. “We are encouraging our lending partners to follow suit.”
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