A report out this week reveals lending to small business in the United States eased for the fourth month in a row, which means companies continue to be hesitant to take on debt to support growth. On a more local level, from where we sit in Fairfield County, we notice very much a similar trend. We see continuing confidence issues in the local business community as companies are not able to project when their next sale might come or, for that matter, what health care and taxes are going to cost them.
Unfortunate as it is, there are plenty of reasons— both direct and indirect—as to why credit to small business continues to be constrained. Monetary policy, increased regulation, lack of demand and certainly the housing and real estate crisis have all contributed. Nearly a third of all small business owners tap the equity in their home to finance their business. However, in today’s market, where values are down and houses underwater, this important source of equity is all but gone.
Governor Malloy’s JOBS bill has created borrowing opportunities for small business through the Department of Economic and Community Development and the Community Economic Development Fund (CEDF). A $100 million loan fund was created, is attractively priced and designed for quick turnaround, especially for companies that have had their balance sheets and income statements battered in the last several years.
First County Bank has partnered with CEDF since its inception in 1994 and would recommend our small business clients look to them for financial support.
Small business lending is a business we, here at the bank, like and would like to grow. We are probably asking more questions these days than in the past, but that’s OK. We also have more “feet on the street” bankers looking for opportunities and providing support to our small business clients than ever before. Being a mutual bank, we can take the long-term view of things, rather than focus on quick profits. It also affords us to know our customers and our community well, which helps everyone better weather these challenging economic cycles.