After post-recession starts and stops, small-business loan demand appeared to pick up significantly in the first quarter in the tri-state region and nationally.
In a survey published in mid-April, Greenwich Associates said the share of small businesses reporting success in landing bank loans is returning to historic norms. About 60 percent of the small businesses participating in the Stamford-based company”™s survey have applied for credit in the past year; of those that applied, about 60 percent were approved. That compares with 64 percent and 70 percent application and acceptance rates among middle market companies tracked by Greenwich Associates.
In its own ongoing survey of small business finances updated this month, the Federal Reserve Bank of New York said most area small businesses continued to rely heavily on bank financing, with two-thirds of respondents listing at least one credit product in their top three sources of financing, including credit cards and commercial bank loans.
The survey covered more than 425 small businesses in New York, New Jersey, Pennsylvania, and Connecticut ”“ though Connecticut at present is the lone state with no organization listed as a partner on the survey. The Fed intends to release the survey quarterly, with the next installment to focus on credit card borrowing and terms for small businesses.
Credit card reliance broadly increased for most companies, save startups, in business less than five years, which relied more heavily on business earnings or loans from families and friends.
In a review of its first quarter results, JPMorgan Chase & Co. said it lowered its expectations for losses in its credit card portfolio, amid general improvements in its overall loan portfolios.
“Small business loans were flat for our total company quarter-over-quarter,” said Jamie Dimon, CEO of JPMorgan Chase, in a conference call with investment analysts in mid-April. “But this quarter is generally a very low quarter, so it”™s a very good sign in our opinion. We”™re starting to see real, small-business loan demand.”
Similarly, Webster Financial Corp. cited overall improvements in small business lending, even as the Waterbury-based company makes a push to grab more market share in Westchester County, N.Y.
“It”™s really ”¦ stabilizing on the commercial side,” said Gerald Plush, chief financial officer of Webster Financial, in a conference call. “A lot of the emphasis, a lot of the investment that we”™ve placed in the organization, has been in small business.”
Still, even as Westchester County and its neighbors Putnam and Rockland counties made employment gains in March, the Fairfield County area lost 2,500 jobs from February according to estimates by the Connecticut Department of Labor, continuing a pattern of two steps forward, one step back.
At a legislative banking committee session in mid-April, the CEO of New Canaan-based BNC Corp. said his community bank and others have been in lockstep with small businesses throughout the recession.
“We are the banks who kept our commercial loan window open when so many of the money-center and regional banks were telling their best, loyal commercial borrowers that, ”˜We”™re not here for you any longer,”™” said Jay Forgotson, whose BNC owns Bank of New Canaan, Bank of Fairfield and Stamford First Bank.
“Community banks make loans to small businesses because they know those loans allow small businesses to grow and create new employment opportunities in their community,” Forgotson said. “We lend to our neighbors in the community and we know we will be repaid.”
