Craig G. Francis

SBA Announces First Group of Community Advantage Lenders

In December, 2010, the SBA announced two new programs aimed at entrepreneurs and small business owners in underserved communities. The programs, Small Loan Advantage and Community Advantage, were designed to make it simpler for business owners in underserved categories to access funding. The programs would give improved access to low-dollar loans that SBA and U.S. Department of Commerce studies have shown are important for business development and growth in these areas. The programs were also designed to replace the existing Community Express pilot loan program.

These lenders will have access to 7(a) loan guarantees of 85 percent up to $150,000 and 75 percent over $150,000.

On Thursday, April 28, 2011, the SBA announced the first group of lenders that have been authorized to provide loans through the Community Advantage program. These lenders - primarily “community-based, mission-focused financial institutions,” will have access to 7(a) loan guarantees of 85 percent up to $150,000 and 75 percent over $150,000. The program will cap loans at $250,000 and will provide a “streamlined” application process. The lenders involved are primarily  Community Development Financial Institutions, SBA Certified Development Companies and SBA nonprofit microlending intermediaries.

The newly authorized lenders include Cen-Tex CDC from Austin, Texas, The Progress Fund from Greensburg, Pa., Eastern Maine Development Corporation from Bangor, Maine, Idaho-Nevada Community Development Financial Institution in Pocatello, Idaho, Kentucky Highlands Investment Corporation based in London, Ky., and CDC Small Business Finance in San Diego, Calif. The lenders may begin immediately offering loans through the Community Advantage program. The SBA indicates that it will continue approving lenders going forward.

If you are a small business owner or entrepreneur in an SBA-recognized underserved community and you would like more information about how this program might help you, contact me and we can set up a time to discuss your situation and needs. You can also receive two complementary reports by joining our email list.

Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.

 

Update on Startup America

 

Back in February I wrote about the new initiative President Obama, Steve Case, and Carl Schramm announced to try to jump start the process of new business creation: the Startup America Partnership. since it is now near the end of April, it seemed like a good time to check back and see just what has happened and if there have been any results so far.

Microsoft, Google, HP, and other major companies [have] committed to providing over $400 million in support and resources to the Partnership

One of the first moves the Partnership made was to appoint Scott Case, cofounder of Priceline.com, as CEO. Scott Case has since been traveling around the country speaking with various industry leaders about the project. This could be a good move for the organization, as Case has a reputation for getting things done both as an entrepreneur and more recently in his work with the organization Malaria No More.

A bigger announcement came this week with the news that Microsoft, Google, HP, and other major companies had committed to providing over $400 million in support and resources to the Partnership. This will include discounts on products from HP, training and mentoring by the likes of Cisco and Ernst & Young, and advertising on Google. The Partnership also added several nonprofit companies, including Angel Capital Association and The National Venture Capital Association.

Startup America has also retooled its website to make it more useful for entrepreneurs to access information. The site now leads with the question “Which Stage Are You In?” and provides choices from Idea to Speedup, depending on the answer. The Partnership is also providing a variety of events, including talks, workshops and seminars for business owners. Finally, the site encourages visitors to share their stories and questions and to join a Twitter feed.

While all of this is helpful, and no doubt some businesses will find success through the Partnership, there are many issues still facing small businesses that have not been addressed here. The uncertainty of tax rates and Obama’s pledge to end what he considers a “giveaway” to the rich - the very people who create jobs and, might I add, a category he falls into as well - will cause many business owners to hold off on growth and expansion. Why set yourself up to pay even higher taxes for success? Also looming over the economy are the myriad effects of Obamacare - some of which we still are unsure of the extent. Yes, Nancy, Congress voted for it but we still don’t know all that’s in it.

If you have gotten involved with any of the elements of Startup America, I would like to hear from you. Has it been a positive experience, negative, neutral, or yet to be seen? And if you are a business owner who is ready to grow and you need some advice on funding, please contact me. I have over 30 years of experience working in the industry and have helped over 2500 companies in that time. There are very few questions that I have not heard already.

Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.

 

Changes in Small Business Lending

As this year progresses, we are seeing more changes and movement in the small business lending field. Some of it is questionable, but there are positive signs out there. We are by no means out of the woods yet, and there are still many rocks ahead, but perhaps the financial waters are becoming a little less choppy.

In the previous 12 months about 59% of those businesses surveyed had applied for funding, with 57% actually receiving money

First of all, a report in Investment News cites a new study by Greenwich Associates, the financial services research and analysis company. According to the study, it appears that lending may be returning to pre-Recession levels - at least by some measurements. The report is based on the analysis of over 500 businesses with total annual sales in the $1 to $10 million dollar range. According to Greenwich, in the previous 12 months about 59% of those businesses surveyed had applied for funding, with 57% actually receiving money - which is close to what they say are “historic” levels. Greenwich explains that this improvement in small business financing numbers follows on the earlier return of near-normal lending to stronger middle market companies. The improvement was due in part because of smaller lenders moving in after major banks cut back on their lending to small businesses. This was followed by the big banks moving back in to the field after paying off large chunks of their TARP money. As I have pointed out many times, banks are in the business of lending money, so sooner or later they would have to return to that mission. Many questions remain regarding the big banks’ real commitment to small businesses, but again, any movement forward is an improvement.

On another lending front, the Small Business Lending Fund continues to straggle along. That is the $30 billion fund that the Small Business Jobs Act created last fall, with the idea of making it more attractive for community banks to lend to small businesses. Alas, in the best practices of the Federal Government, the details have been agonizingly slow in coming. An article in Finance & Commerce reports that the fund, which was first outlined by President Obama back in January, 2010, still does not have all of its regulations in place. According to the report, it took over three months for the rules applying to C-Corp banks to be finalized, and the rules for S-Corp banks are still unfinished. For a program that was supposed to stimulate lending to those small businesses that traditionally pull the country out of down economic times, this is not a confidence booster. As the article points out, many banks in Minnesota have chosen not to pursue funds through the program, and this is echoed in many other parts of the country. Another reason mentioned, and one I saw back when this was put in place, is the concern many community banks have about letting Washington have any more hold over how they do business. When the government comes to your door with money in hand, be very careful about what is in the other hand.

CFO.com reports that the first sale of notes backed by a pool of SBA-guaranteed loans was recently completed by Newtek Business Services

Finally, it seems that there is a new game in town when it comes to asset-backed securities. CFO.com reports that the first sale of notes backed by a pool of SBA-guaranteed loans was recently completed by Newtek Business Services. The $16 million deal provided $24 million in backing as insurance against the sort of collapse we saw with mortgage-backed securities. The big change here is that Newtek used the unguaranteed portion of loans in the securities, rather than the SBA-guaranteed portion. This is a new wrinkle that will bear some watching to make sure it does not lead to trouble.

It will take some time to sort out just what this all means, but one thing that we do know is that money is out there for the right businesses. The trick is showing lenders that your business is one of those “right” businesses for them to work with. This means knowing how to present and package your company, as well as knowing which lenders to approach. There is a science to creating a successful SBA loan application package, and with over 30 years in the industry I have the experience and the contacts to help you get the right package in front of the right lender.

There is, however, something you need to understand - while the major banks in the US, the ones you hear in commercials, claim to be lending $10 billion, or more, to small businesses, the reality is that they are lending to the largest end of the small business spectrum. This spectrum includes the middle market of businesses with sales ranging from $10 million to $100 million. This might be their definition of small business, but it generally does not include the small firms that we most commonly associate with our spectrum of businesses. That means the best bet is either working with a smattering of small community banks or a combination of big and small banks to see which has an open door and a credit culture that will accommodate your situation. If you prefer to work on your business instead of banging on a bunch of bank doors, let me know. I will probably know which banks are most likely to give you the approval you are seeking. Contact me and we can discuss your situation and needs in greater detail.

Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.

Good News for SBA - for Now

We did get a little bit of good news out of Washington, with the agreement by Congress and the White House on a budget for the remainder of the 2011 fiscal year (which ends in September). And not just the fact that there was an agreement. According to a report in the New York Times, the SBA budget for the rest of the year will not take any major hits, in spite of earlier talk. As with the rest of the federal government, the SBA will face a 0.2 percent cut in discretionary spending. What it won’t have to deal with - yet - are bigger cuts in special programs. But that is likely to change for the 2012 budget.

The earlier version of the budget, passed by the House in February, actually did cut about $25 million dollars from the SBA for salaries and expenses, which would have affected counseling grants and some other functions. However, the final agreement returned the SBA budget to $433 million. It also keeps the separate loan guarantee fund at $236 million. This is good news for small businesses that are currently in the process of applying for SBA-guaranteed loans.

On the other hand, the 2012 budget promises to be reduced from the current level, no matter who comes out with the stronger argument. The Republican-led House, in a budget outline presented by Congressman Paul Ryan, would call for a $100 million reduction in the SBA appropriation level. President Obama’s proposal would cut only $28 million from current levels.

Since the SBA looks to have less money next year, now is the time to look into applying for a guaranteed loan. If you are looking to expand your business or, even better, if you are looking to purchase commercial real estate, contact me to evaluate your current situation. With over thirty years in the lending industry, I have the experience and contacts that can help give the right borrower the edge needed to get an application approved.

Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.

Budget Battles Continue in Washington

A recent article by Kent Hoover on Portfolio.com discusses the continuing budget crisis in Washington, D.C. Currently the government is looking at a Friday, April 8, deadline to put in place either a full budget or another continuing resolution to avoid a threatened government shutdown. Such a shutdown would affect hundreds of government functions and programs, including the SBA loan guarantee programs that help new and expanding businesses. But there is more at stake than just keeping government “running” at its current or near-current levels.

According to the article, it seems that President Obama is frustrated by the attitude that Republican lawmakers have about the ongoing budget battle. He accuses them of a “My way or the highway” approach to the negotiations, and wanting to get “110 percent of everything” they are asking for. He also has called on Congressional leaders to “act like grownups” and come to a compromise. House Speaker John Boehner has countered that the House has done its job by passing a budget bill, but the Senate has refused to act on it. In response Senate Majority Leader Harry Reid accuses Republicans of refusing to be “fair and reasonable.” But I would like to remind the President and Congress of a few points.

First, this budget “crisis” is for the 2011 federal fiscal year, which ends in September. Yes, they are still arguing over the budget that should have been passed last year when the Democrats had large majorities in both the House and Senate. There did not seem to be the same concern to get things done when it would have been much easier for Obama and his people to push through exactly what they wanted. Perhaps they were all too busy worrying about getting reelected in November.

A second point the President seems to ignore is that he and the Democrats had the same “my way or the highway” attitude when they took over in 2009. Does anyone remember Nancy Pelosi telling Congress they had to pass Obamacare in order to find out what was in it? Or Harry Reid holding votes on Christmas Eve in order to force through what the Democrats wanted?

Now, an important third point - the amount of cuts proposed. The Republican budget calls for $61 billion in cuts in a budget that is well over $1 trillion in the red. In other words, if my math is still accurate, barely a 6% cut in overspending. In response the Democrats have suggested only $33 billion in cuts, for a 3% cut in overspending. If you or I tried to run our household budgets that way we would not last a month.

Finally, unless I have missed something, in spite of complaints about the intractability of the House Republicans, Senate leader Reid has neither called for a vote on the House budget nor proposed an alternative that could be discussed in a joint session. Yes, the House is responsible for initiating all budget bills, but if the Senate does nothing there is not much more that can be done.

Is a possible government shutdown going to hurt small businesses and the recovery? In some ways, perhaps. As the article notes, the SBA would not be able to commit any money to loan guarantees if there is no budget. There have already been $14 billion in SBA Loans during the first half of the fiscal year, and many more businesses are waiting to hear about their applications. But, is running the country deeper into the red going to help in the long run? Most definitely not. Washington can continue to print money that is worth less than it was, but that is going to encourage inflation, not growth. There needs to be a point when we begin to get some sort of handle on government overspending. That point is long past already.

Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.

The Economy - For Better or Worse?

As if to emphasize the helter-skelter status of the economy, two recent surveys show diametrically opposed views by small businesses. One shows that business owners are more confident about local business conditions and are looking forward to the next six months. The other shows that business owners are overwhelmingly pessimistic about the economy. Who do you believe?

The first report, the Discover Small Business Watch March Confidence Report, released on March 30, 2011, and reported on in Entrepreneur, shows a drop in an already low confidence level. The report shows that the number of small business owners who felt the U.S. economy was getting worse rose from 41% in February to 54% in March - a serious 13% increase and the highest level since September, 2010. What’s more, the outlook for their own businesses declined as well, with 42% feeling things were getting worse in March compared to 40% in February; the number feeling optimistic dropped from 33% to 30% in the same period. Add in 77% who said their profitability had declined over the past three years and 76% who said that rising gas prices were a part of that, and you have a very dismal outlook.

But then, as if to add whiplash to the other injuries business owners are facing, the Central Penn Business Journal/CentralPennBusiness.com published results of the PNC Financial Group’s biannual Economic Outlook Survey which provides an opposite impression of the economy. According to this survey, 58% of small business owners are optimistic or moderately optimistic about the national economy, and 62% feel that way about their local economy. Of those surveyed, the report shows that 48% expect sales to increase in the next six months, up from 42% in October, 2010, and 37% expect profits to rise, up from 32% in the previous survey. One area where both reports agree is that around three-quarters of those surveyed expect rising gas prices to negatively affect their businesses.

Both reports agree...that around three-quarters of those surveyed expect rising gas prices to negatively affect their businesses.

Now, I wont argue with any of the statistics since I did not do the studies. My thoughts on these numbers refer to the optimism of business owners and the familiar quotes like, whistling past the graveyard; the glass is half full or half empty; there are lies, damned lies and statistics.

You can skew your polling to reflect what you want reflected, and this always depends on what you are trying to sell when coupled with the rosy or gloomy stats. Each small business is a unique microcosm reflective of factors that may of may not be affected by the local, regional or national circumstances. The consumer drives the national economy. Many are spending again since they are not paying their mortgages, credit cards, car and student loans. If you don’t have to pay your debts you are going to be doing well even on unemployment. A 19% unemployment rate works its own bad effects and is impossible to ignore however and until this gets corrected, the economy will still be flat on its back.

There is about $3.5 trillion in fiat fed currency sloshing around in the economy, courtesy of the Fed creation of 2008. This is the money that you hear about all the time that the Fed is printing to fund our national deficit of $1.7 trillion. It has to go somewhere. This money equals 25% of the GDP and is independent of economic activity. And it is finding its way into the stock market, businesses and consumers. It's like you winning the lottery. You are rich for a while as money showers down on you, notwithstanding your income . Reality lurks in the weeds once the capital-stoked spending spree stops and the fiscal hangover commences.

I do think some of this euphoria is a result Federal sugar water and not a growth in the well being of the economy, businesses and consumers.  But I could be wrong. I also think some of it is real growth, since you can only keep the American entrepreneurial animal spirits down so long.  Kind of like the professor in Jurassic Park said, 'Life will find a way!'

So where does that leave us? Do we look forward with optimism or do we fear the future? Both, really. We need to be prepared to slog it out as long as the economy continues to creep along the way it has been. Anyone who expects rapid, positive change is deluding him/herself - it just is not going to happen. But, as business owners we have this innate need to look for the glimmer of light out there. If we didn’t, we would not have gotten into business in the first place. In fact, a third survey, done by Citibank in February, showed that 73% of those asked would start their business again, even knowing what they would face. That must count for something, right?

Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.

 

Good News for Commercial Real Estate Owners

Last year, as part of the Small Business Jobs Act, Congress authorized implementation of a program that would allow some owners of owner-occupied commercial real estate (CRE) to refinance with an SBA 504 loan. When that program began in February, 2011, only CRE with maturing mortgages or balloon payments due before December 31, 2012, was eligible for consideration. That is all about to change.

 
In a press release on Tuesday, March 29, the Small Business Administration announced that by April 6, with publication of the changes in the Federal Register, the program will accept CRE with  maturation or balloon dates beyond December 31, 2012. The goal is to provide small businesses with a way “ to secure more stable, long-term financing” in order to avoid potential foreclosures that would further damage the struggling economy. The money businesses save with lower financing rates could be used to cover day-to-day expenses, and could make the difference between survival and failure.

The program is not eligible to all small businesses. The CRE must be owner occupied with the debt  incurred less than two years before applying. In addition, the business must have been in existence more than two years and payments on the debt must be up to date for the past 12 months. Businesses can refinance up to 90% of appraised value or 100% of the outstanding loan, whichever is less, and money received through the program can only be used for expenses normally eligible through 504 loans.

The program will only run through September 27, 2012, or until all the money has been allocated. The Small Business Jobs Act authorized the SBA to approve up to $7.5 billion each year in 2011 and 2012, and expectations are that it will go quickly. You can read the complete press release here. If you are interested in applying and would like advice and guidance, you can contact me at 888-666-9722 and we can set up a time to discuss your business’ particular situation.

Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.

Verdict is in: Recession hurt small business growth

 

Two recent articles, in the Wall Street Journal and the El Paso Times, are confirming what we have been saying for some time: tightening financing options caused a severe drag on small businesses and start ups during the Recession. Many businesses scaled back during the past few years, but those that were looking for money to expand or simply to survive had a tougher time getting any. Big lenders cut back the most, but smaller community banks also had their own difficulties to deal with.

Bob Coleman, editor of the Coleman Report, told Vic Kolenc of the El Paso Times (in “Lending world has changed for small businesses, writer warns”) that the combination of the Recession and stronger attention to regulations in the banking industry made it more difficult for small businesses to access funding. He pointed out that not only were small business loans were harder to get, the other traditional funding sources - personal and business credit and home equity - were cut back considerably. Coleman does see things easing up somewhat, but most banks are setting additional requirements for prospective borrowers to provide.

According to an article in the Wall Street Journal by Justin Lahart (“Recession Caused Sharp Decline in Start-Ups”), data from the U.S. Census Bureau shows that start up businesses took the greatest hit ever during a recession. From April, 2008, through March, 2009, new business starts were down 17.3% compared to the previous 12-month period. It was also the fewest start ups since records on new businesses began to be kept in 1977. This is also reflected in the fact that there were some 700,000 fewer people employed by businesses less than a year old in March, 2009, as there were in March, 2008. Anyone looking for one reason our unemployment numbers continue to be so bad need look no further than this.

The good news is that, as Bob Coleman pointed out, banks are beginning to look at lending to small businesses again. After all, lending money is their business and they have to get back into that in order to survive - they cannot expect to be bailed out again so soon. The caveat is that lenders are looking much more closely at the information borrowers are providing. Balance sheets and financial statements are not enough; banks want to know they are dealing with someone who knows how to run a successful business. Working with someone who has experience in the lending field can go a long way toward setting up for a successful loan application. With over three decades in the industry, I have worked with hundreds of businesses and scores of lenders and can help with those small details that make a difference. Sign up for two complementary reports, and I will contact you to set up a time that we can discuss your business funding needs. Now is the time to begin moving forward with your business plans.

Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.

 

Treasury Conference Looks at Lending Issues

Tuesday the Treasury Department hosted a conference with much of the focus on business funding issues. U.S. Treasury Secretary Timothy Geithner and Small Business Administration Administrator Karen Mills both spoke at the meeting that included entrepreneurs, venture capitalists, and government administrators. In a replay of what has been said many times already, both Geithner and Mills touched on the difficulties small businesses have had accessing funding since the beginning of the Recession.

Two articles in the Wall Street Journal touched on different aspects of the conference. In “Opinions Abound at Capital-Access Forum,” author Emily Maltby relates the discussion on how to improve funding for so-called “gazelle” firms (“those top-performing companies that take off rapidly and provide jobs”). One problem, as detailed by representatives of smaller venture capital companies, is the tendency for institutional investors to go with larger VC firms, when they invest at all. The challenge, according to Mills, is finding ways to encourage these companies to get “back in the game.”

Jeffrey Sparschott’s article (“Small Businesses Need Funds to Compete -Geithner”) touches on this same issue as he reports on Geithner’s concern that "The financial crisis caused a great deal of damage to the capacity of innovators to access capital.” It is important, he says, that “innovative companies” have access to the funding they need in order to help deal with the lingering economic malaise.

One important element that is brought up in the Maltby article is the concern voiced by a number of participants on government involvement in getting lending back on track. From over-regulation to unintended consequences, government involvement in business is always troubling. Several participants specifically pointed out problems with SEC regulations being “outdated” in light of recent developments in online funding platforms. Others called for “solid and more-predictable government policy” from Washington.

Some of what the Treasury meeting brought up will be beneficial, if businesses are allowed to put ideas into practice with limited government involvement. However, seeing that this was sponsored by the Treasury, it’s likely that Washington will have its fingers in as much as possible. And we have seen what happens when government becomes involved. My concern is that with taxes, regulations, health costs, lack of capital and an anti business environment in the White House as mill stones around the neck of real job-creating  business people, these “gazelles” will be about effective as the 'green jobs' and 'clean energy jobs' in pulling us our of this mire.

For now, the best plan for business owners and new entrepreneurs is to work with someone who can help them get all of the details in order before applying for funding. The requirements the banks and other lenders have put in place since 2008 can be onerous, but they are not impossible to work through. I have been in the loan industry for over three decades and have worked with all types of lenders. You can sign up for two complementary reports and I will contact you to set up a time to discuss your business needs.

Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.

Business Lending Continues to Lag

The results are in, and small businesses are not out of the woods when it comes to funding. In spite of some extraordinary additions to SBA funding programs in 2010, reports from a number of sources indicate that overall lending to small businesses was down over 6% between June, 2009, and June, 2010. This is even taking into account the $963 million in additional appropriations provided to the SBA for enhancements in the 7 (a) and 504 loan programs. And the news is not getting much better.

In an article in CNNMoney.com, writer Catherine Clifford points out that this $43 billion drop is just part of an overall $53 billion lending decline from the high of over $700 billion in June, 2008. While some of this is a result of small businesses scaling back or foregoing previously planned expansions, many observers worry that deserving businesses were denied loans simply because banks were afraid to lend. While lending also dropped to large businesses, these entities were better able to weather the storm because of access to other forms of funding, including stocks or outside investors. Clifford argues that, in spite of making “a big show of studying the small business credit crunch,” the Federal Reserve is still off the mark when it comes to dealing with the situation. While the $30 billion fund the government set up to help smaller banks make loans to small businesses, the fact remains that the majority of loans still come from banks with assets over $10 billion.

So what are these larger banks doing? John Tozzi, in an article in Bloomberg Businessweek, reports that three of the biggest lenders, Bank of America, JP Morgan Chase, and Wells Fargo, all reported increased lending to “small” businesses in 2010. These three were under pressure from the White House to increase business lending, in part because of the huge bailouts they had taken earlier, and had made pledges to do so. The numbers are a bit misleading, to an extent, particularly in the definition of “small business” each bank uses. As an example, B of A lumps together all businesses with $50 million in revenue in its numbers, and most of their lending increase went to those in the $20-$50 million range.

An even more recent article in Reuters indicates that small business lending has increased, but that it is still far below pre-recession levels. The article by writer Ann Saphir reviews the just-released Thomson Reuters/PayNet Small Business Lending Index which shows that lending in January was up 14% from January 2010, but did drop compared to December 2010. This could be in part because the extension of the SBA loan sweeteners ended on December 31. The article also predicts that it could be up to two years before small business borrowing recovers.

Where does that leave small business owners? First, realize that banks are still lending money to businesses that fit into their criteria. After all, banks are in the business of lending money, they have just become extremely careful of whom they lend it to. Your best move, if you are looking for money to support or grow your business, is to speak to an expert who can give you the straight talk on your situation and then help you set yourself up for the best chances with the lenders. You can get a start by signing up for two complementary reports from my website SBALoanStore.com; I will contact you and we can set up a time to discuss your business’ needs. You can also find other great information there.

Craig G. Francis is the owner of Francis Financial and The SBA Loan Store. He has been a top producer of SBA Loans since 1981, and has worked with Dun & Bradstreet and Bank of Commerce. Craig Francis has the expertise to steer clients through the often confusing rules and regulations associated with SBA Loans, having helped over 2,000 businesses acquire over a billion dollars in loans. He can be contacted through CraigGFrancis.com, SBALoanStore.com, on LinkedIn, or at 888-666-9722.