Small Business–Caught in the Middle
I posted about this subject before, but I thought it would be a good idea to see if anything has changed since then. Apparently it has, but not for the good of small business.
“…community banks have plenty of money to loan, but thanks to increased regulatory scrutiny, all banks–even those that had no part in the subprime mess–are being forced to tighten their lending standards and are therefore narrowing the range of acceptable borrowers.”
–Paul Merski, Chief economist, and Director of federal tax policy for Independent Community Bankers of America“We want to lend, but the regulators are flat-out telling us, ‘Get your capital up.’ Then there’s Congress telling you to, ‘lend it all out.”
–Greg Melvin, Board member of FNBCorp, a PA based bank that received $100 million in federal bailout funds.“The left hand has the banker by the throat, saying ‘We want your ratios adjusted to compensate for diminishing assets,’ while the other hand is saying ‘we need you to start lending.’ They’re coming from different directions.”
–Curtis Cummings, CEO of Alan Jeskey Builders of Las Vegas
Well, as is typical of anything the U.S. government is involved in, the left hand doesn’t know what the right hand is doing–and small business is caught in the middle.
Hundreds (thousands?) of small businesses are closing every day–putting more and more people out of work–because they do not have the financial resources to see them through this recession.
Putting cash in the hands of consumers who are supposed to spend it in businesses that no longer exist doesn’t make much sense.
Small businesses need access to operating capital to keep their business viable until the economy turns around. The banks have the money to loan to deserving businesses, and the willingness to loan it, but the federal government is telling them they cannot loan the money out.
Doesn’t make much sense to me–does it to you?
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