Credit for Small Businesses Keeps Disappearing
Dec 14th, 2009 @ 2:48 PM by Debbie Dragon
Regardless of on-going efforts of the Obama Administration small business credit, at shockingly high rates, continues to dwindle. A treasury report just released this week, shows that major banks across the country decreased small business loan balances by another billion dollars in October. This leaves some small businesses in a financial bind, struggling to expand and to provide for essential expenses like everyday operation costs.
Another study released last month by the Treasury Department found that 22 banks that benefited the most from the Treasury Bail Out Program have decreased their business lending by 11.6 million just since April.
Obama, despite previously failed attempts, is putting even more pressure on banks this week. On Monday, he met with CEO’s from a dozen of the country’s largest banks. His goal was to pressure them to do more to help rebuild a struggling economy that they played a major role in damaging. Obama told the bankers, “I’m getting too many letters from small businesses who explain that they are credit worthy, and banks that they’ve had a long-term relationship with are still having problems giving them loans.”
Next week, Obama plans to continue his campaign to help small business owners by meeting with community bank representatives.
Banks have been swift to stand up and defend their actions. They claim that many applications for small business loans are too risky and that current small business loans are defaulting at high rates.
Marc Bernstein, A Wells Fargo executive vice president and the head of its small business unit says, “It just wouldn’t be responsible to lend more money to those people as they are struggling to make their existing payments.” He went on to say, “We want to make as many loans as we possibly can, but we require a reasonable likelihood that it is going to be repaid.” At the same time, Wells Fargo was the top lender this
year through the Small Business Administration
Debbie Dragon is a full time freelance writer and the co-owner of ReliableWriters.com.