question could be called it a modern version of the 1980s question “Where’s the
beef?” But while Wendy’s popular commercial produced smiles, business owners
and financial institutions are doing anything but smiling as they try to find
the answer to this question.
nation’s banking system crashed in the fall of 2008, capital for business loans
– especially small business loans – came to a screeching halt too. Between
fiscal 2007 and 2009, loans approved by the Small Business Administration (SBA)
declined 56 percent.
18 months ago, the lending pool just dried up,” says Jack Fischer, principal
partner of Third Coast Consulting and a former Wisconsin Department of Commerce
Secretary. “Now things are starting to loosen up, but it’s taking two or three
times as long for projects to get through.”
commercial lending wasn’t on the agenda for the First Business Economic Forum,
which was held in mid-December in Appleton, it was the topic on many people’s
minds. Whether businesses are seeking capital to expand or just survive, the
process is more complex than it was two years ago, says Corey Chambas,
president of First Business Bank.
very political. You have politicians saying ‘banks need to lend more to get the
economy going,’ but then we have bank examiners who come in and are tougher on
us and want higher capital ratios. We have money that we want to lend, but
finding the right company that fits with these new rules isn’t the easiest,” he
stimulus package approved by Congress nearly a year ago increased the SBA loan
guarantee from 75 percent to 90 percent and substantially cut fees to help get
the economy moving again.
Chambas says the process was slow and cumbersome. “It’s been frustrating,” he
admits. “Just as things were starting to look up, they dropped the loan
guarantee back down to 75 percent.”
potential bright spot regarding financing is that the FDIC changed rules regarding
commercial real estate and mortgages to give owners and banks some breathing
room and rework some loans, Chambas says. “We’re
really hoping this keeps more commercial real estate loans out of foreclosure
and help stabilize commercial valuations. Otherwise, we could see something
like we did in the housing industry with rising foreclosures and lower
McGee, an economics professor at the University of Wisconsin-Oshkosh, says it’s
time for regulators to find a happy medium. “Four or
five years ago, there was too much risky behavior going on by lenders, which
led to the economic collapse. But now we have over-regulating and it’s slowing
the recovery. Hopefully the FDIC’s actions are a sign that some of these
regulations are being loosened and we can get out of this,” he says.
that’s something everyone can agree on.