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Lending Drought Impairs Small Businesses (The Miami Herald)
November 10th, 2009
Some small businesses in South Florida say they are ready to grow and add jobs — but they can’t get the financing to do it.
BY JIM WYSS, The Miami Herald
Robert Stopanio’s new medical-device manufacturing plant was supposed to open eight months ago and employ about 75 workers in a state that desperately needs jobs. But Stopanio hasn’t been able to find the financing.
While the federal government pours billions of stimulus dollars into the economy and bails out some of the country’s biggest banks, local businesses say they are ready to grow — if only they could get a loan.
“I am a growth mongrel, I love growth. But there is no money. There is no working capital,” said Stopanio, the owner of Scorpion Performance of Fort Lauderdale.
Instead, Scorpion is building its new Ocala plant from the profits it pulls in from its primary business making high-end automotive parts.
“We have to build as we earn,” Stopanio said. With a little luck the new plant will be open by Christmas.
Commercial and industrial lending across the United States fell 8 percent from December through June, according to the Federal Deposit Insurance Corp., and the lending drought has hit small business even harder.
The Small Business Administration, which encourages commercial lending by providing banks with hefty guarantees, said total loan volume was down 70 percent in Miami-Dade and 64 percent in Broward during fiscal year 2009, which ended in September.
The agency has been trying to spur lending by providing 90 percent guarantees on some loans, but there’s only so much the government can do, said SBA spokeswoman Hayley Matz.
“We can guarantee the loans, but we need the institutions to make the loans,” she said. The agency has been pushing small community banks to take up the slack and is asking Congress to raise SBA loan limits and allow the agency to back more loans.
President Barack Obama has acknowledged that the recovery is being jeopardized by the credit crunch and has asked Treasury and the SBA to meet with business leaders to craft a solution.
The issue is a prickly one for the administration, which is being tarred for pumping billions into banks even as some of those institutions are turning off the taps.
For years Bank of America was one of South Florida’s largest SBA lenders. And the George W. Bush and Obama administrations have put $45 billion into the institution to prop it up since the financial crisis began.
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