20 Nov 2008
The number of U.S. Small Business Administration loans approved in New Jersey in fiscal 2008 fell to the lowest level in seven years, according to a report from the agency.
October, meanwhile, is in line to be the worst month for the government-backed loans since February 1999, said James Kocsi, head of the agency's Newark district office.
"We had thought that with the poor economy there might be more need for SBA-guaranteed loans," he said. "But when you have all these banks suffering losses and facing liquidity issues, they just pull back. It didn't matter that we were there removing the lion's share of the risk."
For the year ended Sept. 30, the state office approved 2,394 loans, down 33 percent from a year ago, that were worth a collective $492.1 million, a drop of 16 percent from 2007. Those figures reflect significantly fewer loans nationwide.
In addition to banks' raising the lending bar, Kocsi said, fewer business owners are seeking loans out of fear of an extended downturn. "They're not looking to expand but just survive the current economic period," Kocsi said.Also, about 30 percent of SBA loans traditionally go to start-ups, and in the current climate, many prospective business owners are delaying launches.
One bright spot was increased lending by small community banks, which translated into small increases in the number of Certified Development Company loans for fixed assets and micro loans of less than $35,000, Kocsi said.
However, those increases couldn't offset a steep and accelerating drop in traditional 7(a) loans as national and large regional lenders reduced their lending.Nationally, the number of loans dropped by 30 percent, with the dollar value, $17.96 billion, off by 13 percent, the agency said.
Kocsi said his office is increasing outreach to lending partners and is hopeful the recent government infusions of cash to banks will help gradually restore business lending.
Source:http://www.tmcnet.com/usubmit/2008/11/03/3756310.htm