Government Efforts Not Stimulating Small-Business Loans

By Napsha, Joe | Tribune-Review/Pittsburgh Tribune-Review, November 23, 2010 | Go to article overview

Government Efforts Not Stimulating Small-Business Loans


Napsha, Joe, Tribune-Review/Pittsburgh Tribune-Review


Small-business loans in Western Pennsylvania and nationwide have failed to increase significantly in recent months, despite moves by the government to stimulate demand.

The demand for commercial and industrial loans declined from July through September, particularly from the small companies, according to the Federal Reserve's October survey of senior loan officers nationwide. A "modest" number of the banks had eased standards on those loans to small companies.

In the Pittsburgh region, some small-business lenders have seen demand increase while others have not. Overall, the number of SBA- approved loans have declined in each of the three-month periods during fiscal 2010, which ran from October 2009 through September 2010, government figures show.

Even so, the Small Business Administration in Pittsburgh said approved loan guarantees for the recently ended fiscal year increased to 388 loans totaling $87.1 million, from 356 loans worth $67.1 million in fiscal year 2009.

The SBA's Pittsburgh office saw a decline in the number of loan guarantees it approved from July through October -- 89 -- compared to 91 loans from April through June. But, the amount of money that businesses received in SBA loans rose to $19 million from July through September, compared just $11 million from April through June.

"The demand has picked up over the last two months," said Craig Street, national director of SBA lending for Huntingdon Bank, the region's most active lender to small business.

Street credited the SBA's waiving of fees and raising loan limits last year and again from October through the end of the year for the increase in SBA loans Huntingdon processed.

"That spurred some of the lending," Street said.

The Small Business Jobs Act that took effect Oct. 1 gives banks more incentive to process the SBA loans because the government increased its guarantees on the popular loan program to 90 percent of the loan from 75 percent.

PNC Bank, the region's third most active lender to small business, found loan demand remains tepid, CEO James Rohr said during a recent conference call. PNC said it has made $2.6 billion in small business loans for the first nine months of the year, compared to $4 billion for all of 2009.

That's reflected in PNC's most recent economic outlook survey results of small-business owners across the United States. About 75 percent of Pennsylvania small-business owners reported a drop or no change in their need for financing during the next six months, and 81 percent said they definitely or probably will not take out a new loan or line of credit during the next six months. …

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