WTF: Top lenders pull plug on small biz loans
Isn't one of the main problems right now the fact that banks aren't lending? Isn't lending to businesses the grease that will make the financial wheels turn again? I thought so. Well, these folks aren't ready to help out. Hmm.
At a time when small business owners desperately need loans and credit lines to help them weather the recession, some of the industry's most active lenders have bolted shut the doors to their vaults.
Temecula Valley Bancorp (TMCV) and Capital One Bank (COF, Fortune 500) have stopped taking applications for new loans through the Small Business Administration's flagship 7(a) loan program, and Bank of America (BAC, Fortune 500) has slowed its lending volume to a trickle. Small Business Loan Source, a non-bank SBA lender that specialized in commercial real estate financing, is closed to new applications and leaving all new SBA lending activity to its parent company, First Bank in Clayton, Mo.
These four institutions were among the 30 largest SBA lenders in the 2008 fiscal year, accounting for 4% of the program's loan volume, or $524 million of the $12.8 billion that was lent to nearly 70,000 businesses, according to data compiled by Coleman Publishing, which monitors small business lending trends.
Their sudden absence from the lending scene has left a hole that the banks continuing to participate in the program have not filled in. If current lending trends continue, only two of the top 30 lenders are projected to increase their loan volume this year, according to Bob Coleman, the head of Coleman Publishing.
Timmeh can pump all the empty cash he wants into the black hole known as wall street but nothing's going to happen until these banks start greasing those wheels.