Small-business lending is on the rise, locally and nationally
VEGAS INC coverage
Good news for small-business owners: The loan environment is improving.
Small-business lending locally and nationally is on the upswing, members of the banking community say.
“We are definitely in a recovery stage, and the graph is an extreme positive spike,” said Lester Romero, an assistant vice president at Wells Fargo Bank.
During the first three quarters of 2012, Wells Fargo saw a national increase of $11.4 billion in small business primary loans. Romero said he expects the upward trend to continue next year.
Lending to small businesses nationally rose 11 percent from September to October, according to the Thomson Reuters/PayNet Small Business Lending Index.
Local bankers say the steady increase is helping Nevada's economy recover.
Alfred Soboyejo, senior vice president for small business banking at Bank of America, said 2012 was marked by solid growth in small-business lending in Nevada.
“The Las Vegas market has been resilient, and clearly we’re moving in the right direction,” he said.
Soboyejo said his team approved loans worth $155.1 million between Jan. 1 and Oct. 31, a 23.6 percent increase from the previous year. Soboyejo credits low interest rates and the stabilizing commercial real estate market for the increase in lending.
“Those are really good signs that the economy is getting better,” he said.
Bruce Ford, a senior vice president at City National Bank, agreed.
“If there's a silver lining to the economy that has been down, it's that real estate prices came down,” he said.
Ford said his company has seen an overall increase in loans from September 2011 to September 2012, from $12.2 billion to $13.7 billion. He said he expects in-state small-business lending to increase next year.
"We believe it has grown because the economy is recovering," he said.
Ford said City National hopes to aid in the recovery by making loans more accessible.
“We have been on a real campaign to loan out these funds,” Ford said.
Increased lending helps keep jobs in Nevada, a good thing for everyone, said Cassaundra Johnson, director of sales at Nevada State Bank.
“If we keep our small businesses operating, we’re keeping people employed,” she said.
As for criticism that banks have held back approving loans for the smallest businesses, Soboyejo said a lack of sufficient cash flow makes banks hesitate. Johnson said lending to microbusinesses, which she defined as those with less than $1 million in revenue, remains difficult, especially if the company lacks cash flow.
"Sometimes it’s not the size of the company or how many employees you have, it’s how much in reserves you have," she said.