Small business borrowing prospects look better

It may be time to talk to your banker.

“I'm optimistic,” says Karen Lennon. “I can't think of anyone who's negative (looking at 2011). The banks have cleaned up their balance sheets and old portfolios, and are ready to do business.”

That doesn't mean bankers will throw money at every business owner who walks into the lobby, but Lennon has an interesting perspective: President of Chicago-based Wessex 504 Corp., Lennon talks to bankers and businesses nearly every day.

Wessex 504 is seeking, and expects, certification as a packager of SBA 504 loans. Traditionally limited to commercial real estate, new building construction or expansion, and the purchase of machinery and equipment, SBA 504 loans were expanded earlier this year to include refinancings.

Lennon expects significant re-fi activity. “There are a lot of five-year balloons coming due,” she says.

“I talk mostly to community banks,” Lennon says. “I don't know what the big boys are planning, but bankers aren't layering up on business owners” as they did during the past two or so years.

One of the active bankers is Randy Usen, senior vice president at First Bank & Trust, Evanston. “We're seeing some things we haven't seen for a while,” Usen says. “We had been getting business from commercial borrowers who were unhappy with the way they were being treated at their old banks, but now we're seeing business owners who tell us they're ready to buy equipment or a new building.

“That tells me things are starting to pick up.”

What Usen tells the rest of us is equally positive. Although he stresses that First Bank & Trust has been an active business lender throughout, Usen's more global view is that many banks will be back in the lending business. “Most banks have been more concerned about surviving recapitalizing their balance sheets and protecting liquidity,” he says, “but I think money will be available.”

Many bankers have been somewhat flummoxed by conflicting federal mandates. For example, the Federal Reserve, acting as the nation's central banker, has sought to encourage lending by pumping money into the banking system. At the same time, the Fed in its role as a bank regulator has discouraged banks from many types of lending.

It may be necessary to shop for your loan. First Bank & Trust, which Usen says lends throughout the Chicago area, is a “traditional underwriter. We look at cash flow and collateral,” Usen says. Other lenders will pay more attention to the business owner's credit score.

There are other options, as well. Accion Chicago is a micro lender that focuses on truly small businesses. Maximum loan amounts are $15,000 for startups and $25,000 for existing businesses. Vice President Jill Stephens expects the organization, based in the near-West Loop, to have “plenty of capital” in 2011.

• Contact Jim Kendall at JKendall@121Marketing Resources.com.

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