Fed Report Delivers Positive Lending News

For the first time since late 2006, banks of all sizes have begun easing standards on small business loans. However, applying for a loan can still be a nightmare.

August 25, 2010

WASHINGTON -The Federal Reserve's July quarterly report delivered positive small-business lending news, NorthJersey.com reports.

For the first time since late 2006, banks of all sizes have begun easing standards on loans to small businesses and they stopped reducing existing credit line accounts.

Despite the positive note, small business owners are still reporting difficulty with the loan process compared to pre-recession years, with an anonymous process that prohibits small companies from addressing questions.

"I just think the banks are out of touch with people because we don??t get to meet a person," said Ronald Crandol, co-owner of a bus company, who??s been trying to get a loan to buy new buses.

In the first quarter of 2010, loans to small businesses decreased 5.7 percent to $600 billion, down substantially from nearly $700 billion in the second quarter of 2008, according to the Fed.

Only 40 percent of small businesses trying to borrow funds were successful last year, with some reported being rejected immediately based on their industry.

However, James Kocsi, the New Jersey division director for the SBA, said the agency is trying its best to sort through a complex process.

"The agency??s intent is not to make life difficult for small businesses," Kocsi said. "There??s regulations we have to abide by, but many times people think there??s nowhere to go and they??re dead in the water, and we??ve come up with some viable options to help them out."

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