Mar 1, 2011

Commercial lending beginning to gain momentum...?

Sam Spatter says,( Pittsburgh Tribune-Review )

Lending by banks to real estate developers, small business and other companies is picking up slowly, according to Pittsburgh-area financial experts.

They say there is some easing of lending requirements for developers and larger businesses, but small businesses still are having a difficult time. Even those that survived the recession -- showing they have the ability to grow and repay loans -- are struggling to get loans, said Marilyn Landis, vice chairwoman of advocacy for the National Small Business Association and owner of Basic Business Concepts Inc. on the North Side.

"Banks are definitely moving in the right direction, but the lending parameters remain tight," said C.J. Handron, management consultant with the University of Pittsburgh Small Business Development.

In Western Pennsylvania, the Small Business Administration last year guaranteed 428 loans with total value of $110.39 million after guaranteeing 384 loans valued at $85.39 million in 2009. By comparison, before the recession hit the region hard in mid-2008, the local SBA office approved 571 loans for $94 million.

So far in 2011, 20 loans have been approved, valued at $3.82 million.

The latest data from the Federal Reserve Board showed economic activity expanded "at a modest pace" in the fourth quarter in the four-state district that includes Western Pennsylvania. Bankers here and in Ohio, West Virginia and Kentucky said commercial loan demand was "stable or showed modest growth" since September, but loan balances had declined.

Lenders are looking for assurance they will be repaid, Handron said. Two years ago, banks required 10 percent to 15 percent equity from the borrower. Today, they want 20 percent to 25 percent, Handron said.

James Kunkel, executive director of St. Vincent College Small Business Development Center, said that strict lending standards banks installed in 2009 and 2010 remain in effect.

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