SBA, CBIA view state’s lending picture through different lenses
HARTFORD — More than any other single factor, improved access to credit for companies is the tonic to lead Connecticut out of its stubborn recession. However, business groups disagree about just how fast or even whether credit conditions are improving here.To hear the U.S. Small Business Administration (SBA) tell it, the future’s so bright we ought to be wearing shades. The SBA reports that lending in Connecticut increased during the first quarter of the federal government’s 2010 fiscal year, ending December 31. Compared to the first quarter of 2009, the total number of SBA loans increased 43 percent from 127 to 182, while the dollar volume of lending grew 39 percent, from $31 million to $43 million.
Those numbers don’t square with the most recent report on credit conditions by the Connecticut Business & Industry Association (CBIA), which surveyed state business in the fourth quarter of 2009 and came back with “the weakest readings since the survey first began in early 2004.”
What gives?
The American Recovery & Reinvestment Act of 2009 (ARRA) provided some assistance to small businesses, according to the SBA, including an increase in the guarantee on all SBA-backed loans up to 90 percent from 75 to 85 percent and the elimination of guaranty fees, resulting in savings for small business borrowers.
Since then, the SBA nationally has supported more than $19 billion in lending to small businesses through its two largest loan programs and seen its average weekly dollar volume increase by more than 75 percent in comparison to the weeks before the Recovery Act.
But how much of that activity is trickling down to the Nutmeg State is, at the very least, debatable. According to the CBIA/TD Bank Survey released last month, Only four percent of responding businesses characterized current credit conditions as good or excellent, while 49 percent characterized them as average. Almost half (46 percent) said current conditions are poor or fair. More ominously, over the next three to six months, just eight percent of respondents expect credit conditions to improve, while 43 percent expect them to deteriorate even further.
“The economic recovery is greatly dependent upon the private sector investing, growing their businesses and creating jobs,” says Michael Hensinger, TD Bank’s head of middle market banking in Connecticut. “In order to do that, businesses need access to capital.”
“Credit continues to be a major challenge for businesses, but there are signs that may be changing in the future months; as the economy continues to improve, businesses expect credit to become more available,” adds CBIA Vice President and Economist Peter Gioia.
In Connecticut, year-to-year data shows that SBA lending contracted 29 percent in fiscal year 2009 (ended September 30, 2009) from FY 2008 levels. During that period, the number and value of loans dropped from 809 loans valued at $184 million to 576 loans valued at $128 million.
| < Prev | Next > |
|---|
