Why Small banks won't loan to Small Business

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Fascinating to see the disconnect between
what Washington is saying to th public, and what is
happening on the ground regarding small business loans.

"The bank examination climate today is perhaps the most severe in two generations at least," says Cam Fine, CEO of Independent Community Bankers of America (ICBA).   


"It's like a reign of terror, particularly on the community banks," which serve a disproportionate number of small firms.

In public statements and interviews, regulators say they've repeatedly told their examiners to encourage banks to lend to creditworthy borrowers. 

Examiners, they say, are generally fair, affording bankers ample leeway to make their own judgments.

Yet, officials acknowledge that examiners are more vigilant in light of the lax credit standards that triggered steep downturns in housing and commercial real estate and a continuing rise in the number of loan defaults and bank failures. Since early 2009, 177 banks have shut down, and more than 700 are on the FDIC's "problem bank" list.

Commercial real estate -- which makes up nearly a third of community banks' loan portfolios -- continues to be plagued by rising vacancies and plummeting value.

Still, officials concede, examiners may go too far sometimes.

Read the entire article on small business loans, by clicking here.


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