Credit crunch hits small businesses
Credit crunch hits small businesses
Around 65% of domestic banks say they have tightened their lending standards for commercial and industrial loans to small firms over the past three months, according to the July 2008 Senior Loan Officer Opinion Survey on Bank Lending Practices, released in August from the Federal Reserve System. That’s up sharply from the 50% of banks reporting tighter credit in the April edition of the quarterly survey.
[...]… Maria Coyne, executive vice president of community banking for KeyBank, a nationwide midsized lending institution, sees banks everywhere clamping down. Even smaller banks that avoided the risky gambles that have decimated Wall Street are hit by the ripple effects of major crashes like Bear Sterns and Lehman Brothers.
Credit availability is a mixed story right now, according to Ray Keating, chief economist for the Small Business and Entrepreneurship Council, a small-business advocacy group in Oakton, Va.
“If you are dealing with a bank that isn’t in trouble and you have a good track record and relationship with that bank, you’ll have less of a problem getting a loan,” he said. “But it’s only expected that they will want more information to prove to regulators and investors that the loan is worth it. That means that it’s a heck of lot tougher for startups and small businesses without track records to get loans.”
