President's Blog: The State of Small Business Lending
By: Patrick MacKrell
Sometimes perception does not match reality. Unfortunately, after a while, people can allow perceptions to actually change reality. And, that can be very dangerous.
There’s a perception out there that small business lending is difficult to obtain and on a decline. The reality couldn’t be further from that.
We continue to read stories surrounding the decline in small business lending since 2008. Countless research has been exhausted on evaluating the small business lending portfolios of our nation’s largest banks. All of which has led to the obvious answer that yes, small business lending at a majority of our nation’s largest banks has declined. Such data has fueled the perception that lenders are hurting our economic recovery by not returning to pre-recession lending volumes to small businesses. But, in truth, using those days as an appropriate baseline for measuring our national small business lending demand is what’s causing the problem.
We don’t measure our golf handicap based on our single best round and, likewise, we shouldn’t compare small business lending volume today to a time period when many businesses who should not have been deemed credit-worthy or well-managed, were able to obtain loans. Hindsight is 20/20, but those same small business owners are coming to lenders looking for more capital today and are finding it tougher to find financing in this different (and perhaps more appropriate) lending climate.
The truth is that credit-worthy, well-managed and well-operated businesses have absolutely no problem with access to capital. However, trying to operate a business during this time of rising business taxes, uncertainty with respect to employee health care costs and, of course, a continued uncertain economic climate is more than enough to scare owners away from investing in the growth of their business.
The simple truth is that people don’t want to expand while they’re still on the roller coaster. Business owners need to know that the future is consistent and bright. And, they need to know that when their "house" is in order, there will definitely be a place where they can obtain the financing that they need to grow and help their local economy thrive.
The basis of that growth – and our economic recovery -- comes from industries which are typically hard to finance, such as food service and retail. These are the businesses which need access to capital and often – especially today – find it most difficult to locate financing. Even business owners who are doing things right – with proper operational systems, sound business plans and a credit-worthy background – may have trouble finding lenders to provide capital to these industries.
NYBDC is here for such businesses and others across a vast variety of industries. We are doing everything possible to fight this perception that small business lending is difficult to obtain. Look at the success stories on this website and you can see that many ventures are growing with the help of us and our lending partners.
Now, we can only be hopeful that small business owners have regained their confidence in our economy and have put some of their fears to rest and that, once more, small businesses can help lead us to a more complete economic recovery.