Bank loans to businesses up
NEW YORK – The email from the bank was unexpected. Laura Benson got an increase in her small business credit line.
The boost from Wells Fargo & Co. was a pleasant surprise. A previous request for an increase to meet expenses during a slow sales period for her online basket business, Jeanne Beatrice, was rejected. At the time, the bank said the St. Paul, Minn., company didn’t have enough of a payment history on the loan. Six months later the good news came.
“They just gave me the $7,000, without my asking,” Benson says. “Omigosh, just when I needed it.”
The logjam in lending to small businesses is showing signs of clearing. Nearly five years after the recession ended, bankers are lending more and businesses say it’s easier to get loans. Banks are courting company owners and giving them easier terms.
Still, caution remains, especially when a business is young or considered risky. But overall, lending is up, a hopeful sign for the economy because small businesses that borrow may be willing to expand and hire.
Evidence that small business lending has improved is piling up. Banks had $287.64 billion in outstanding loans to small businesses as of Dec. 31, up 1.4 percent from a year earlier, according to the Federal Deposit Insurance Corp.
In January, the dollars loaned to small businesses by banks, independent commercial finance companies and corporations, increased 4 percent from last year, according to Thomson Reuters and PayNet.
And a February survey by Pepperdine University’s Graziadio School of Business and Management found that 39 percent of small business owners who applied for bank loans in the previous three months were successful, up from 34 percent in a survey taken in October and November.
Banks are knocking on Andrew Slattery’s door.