Small-business loan OKs by big banks at record high

One thing that's critical for growth in a capitalistic economy is capital. Small businesses, which have created two out of three new jobs in the United States in recent years, are the companies with big capital needs. The good news is that big banks and institutional lenders are stepping up. In 2017, approval rates from these financial institutions hit record highs, according to the latest small-business lending index from online lending marketplace Biz2Credit, which analyzed more than 1,000 small-business loan applications. "The economy is performing well on many different levels. Christmas retail sales were up, unemployment remains low, and salaries have gone up a notch," said Rohit Arora, chief executive of Biz2Credit, as part of a report on the index. The big banks' approval rate of 25 percent of small-business loans represents a record high. What's even more eye-opening is that institutional investors such as pension funds have an approval rate of more than 64 percent -- another historical high. Smaller regional and community banks approve about 49 percent of their funding requests from small businesses. That level is still slightly behind the 50 percent level reached back in October of 2014, but historically strong. The reason for the strong performance among smaller banks is mostly because of the continued support of guarantees from the Small Business Administration, where smaller banks are most active. "This bodes well as we enter a new year," Arora said as part of the update. "It is helpful for young entrepreneurs, who might not have credit scores high enough for a traditional bank loan, that SBA-backed loans are available through big banks and smaller ones." Credit unions continue to be a significant part of small-business financing options, although the technology offered by their banking competitors is having an effect on their market share. Online and alternative financers also have a high approval rating, but their loans come with steeper interest Continue Reading

Small biz loan approval rates rise as Fed raises interest rates

At its latest policy meeting, the Federal Reserve raised its benchmark interest rate for the second time in three months and predicted two additional hikes in 2017. The increase, approved by a 9-1 vote, is a statement that the U.S. economy is performing well. It marks the second time in the last three months that the Fed has decided to increase its interest rates. Loan approval rates at big banks ($10 billion-plus in assets) improved to post-recession highs in February 2017, according to the most recent Biz2Credit Small Business Lending Index, a monthly analysis of more than 1,000 loan requests. Borrowers had nearly one-quarter (24.2%) of their funding requests approved by mainstream banking institutions in the New York metro area, an increase of one-tenth of a percent in a month-by-month comparison. Meanwhile, institutional lenders are also approving loans in the New York metro area at an Index-high of 63.6%, which is slightly higher than the national average. The stock market and U.S. dollar are very strong and this is attracting a high volume of investors from regions throughout the world. Small business lending is very profitable and we are seeing a variety of yield-hungry investors from overseas get involved in the small business finance game. Regional and community banks, which were approving more than half of their loan requests two and a half years ago, are granting 48.7% of funding requests at institutions in New York. This is below the national average, but there is some room for optimism, especially as it relates to President Donald Trump's intentions of reforming the restrictive Dodd-Frank legislation to scale back regulations for community lending institutions in the near future. This would allow community banks to process loans more easily. Becoming an afterthought in small business lending, credit unions are approving just over two-in-five loan requests (40.8%), on par with the national average. Continue Reading

Small biz loan approval rates at big banks rise as Fed stands pat

For the sixth time in the last seven months, small business lending approval rates improved at big banks, which are approving loans at a national rate of 23.3%. And it’s even higher in the New York City metro area, according to the monthly Biz2Credit Small Business Lending Index, an analysis of more than 1,000 loan applications. Many of the mainstream lenders were expecting an interest hike to happen over the summer and held off on lending in the hopes that more profitable deals were in the near future. Britain's vote to leave the European Union played a big role in the U.S. Federal Reserve's decision to leave the interest rates unchanged during the central bank's meeting in late July 2016. The Federal Reserve ultimately did not call for an interest rate increase at its meeting this week. As a result, big banks find themselves falling behind on lending goals they have set for themselves and are aggressively seeking to close more deals. This includes loosening the standards that they were enforcing earlier in the summer. According to the most recent jobs report, total nonfarm employment increased by 151,000, and although figures were lower than expected, it marked the third consecutive month of substantial increases. Among the industries that experienced the biggest gains in employment for August 2016 were food and beverage establishments, up 34,000 on the month and more than 300,000 new jobs on the year. In addition, the financial activities sector added 15,000 new jobs last month and have added 167,000 on the year. Institutional lenders — credit funds, insurance companies, family funds, and other yield-hungry, non-bank financial institutions — have emerged as a common commodity for borrowers and are approving 62.9% of loan requests, an all-time Small Business Lending Index high. The gradual ascent in its popularity can be credited to a combination of attractive terms and speed by which Continue Reading

Despite volatile stock market, optimism is still high for NYC small businesses seeking loans

In the early part of this new year, the Dow Jones has plunged more than 1,000 points, reversing some of the economic progress that was made in 2015. Fortunately, this has not impacted small business finance as much as one might normally expect. Biz2Credit's Small Business Lending Index, a monthly analysis of more than 1,000 small business loan requests, showed that big banks ($10 billion-plus in assets) approved 22.9% of loan requests from small business owners in the New York metro area in January 2016, a drop of two-tenths of a percent in a month-by-month comparison. It marked just the second time in the last six months that big banks have experienced a decrease in small business loan approval rates. Still, more than one in five qualified companies that approach big banks for funding are being approved, which is substantially higher than during the doldrums of the recession. Big bank approvals have been above the 20% level for quite some time — since June 2014. Outside economic factors, such as stock market volatility and plummeting oil prices, can impact lending decisions. Uncertainty in the market often results in mainstream lending institutions' taking less risks. However, the positive news is that overall, the U.S. economy is in pretty good shape. Earlier this month, the U.S. Department of Labor reported that the national unemployment rate has dipped below 5% for the first time in eight years. Meanwhile, the unemployment rate in New York City has been consistently lower than the national average. Moreover, an increased value of the U.S. dollar relative to other currencies has resulted in the investment in small business finance from various international funds. Further, the recent economic developments in China and other Asian countries have resulted in lower levels of growth, which leads more investors back to the U.S. marketplace. Institutional lenders — credit funds, insurance companies, family funds and other Continue Reading

EDA, TD Bank offer new small business loan

The state Economic Development Authority and TD Bank recently closed the first loan under the New Jersey Advantage small business loan program with Carteret-based Aldo Design Group.To mark the loan closing, EDA Chief Executive Officer Melissa Orsen and TD Bank Market President Nick Miceli recently visited Aldo Design, a family-owned flooring and interior products outlet for retail and commercial customers and home-builders since 1972. The company received a line of credit for working capital and a loan to refinance an existing mortgage.“The financing provided by the New Jersey Advantage Program will improve our cash flow, allowing us to invest more in growing our business and finding even more ways to be the best resource we can to our clients,” President Albert Benavides said in a news release.The program is designed to provide financing to creditworthy New Jersey businesses committed to job creation and retention.The program offers loans and lines of credit financed by TD Bank up to $5 million, with a subordinate guarantee of up to 50 percent provided by the EDA. Companies benefit from optional fixed or variable below-market interest rates.“Aldo Design embodies the entrepreneurial spirit and perseverance of New Jersey’s small business community that inspired TD Bank and the EDA to partner to launch the New Jersey Advantage Program,” Orsen said. “Businesses like Aldo Design drive job creation and economic growth in the State, and have a ripple effect that leads to ancillary growth of other businesses.”TD Bank and EDA said they are working closely to bring the advantages of the program to other businesses.For information, visit Staff Writer Bob Makin: 732-565-7319; [email protected] Continue Reading

Payday loan interest rate cap passes House committee

Payday loan reform Wednesday jumped a major hurdle, but faces a long track ahead.The House Financial Services committee approved legislation sponsored by Rep. Danny Garrett, R-Trussville that would impose an effective 36 percent interest rate cap on payday loans.Passage out of the committee – long a swamp for payday and title loan legislation – represented a victory for advocates of payday reform, who say the short-term loans, with maximum APRs of 456 percent, trap the poor in cycles of debt."We all understand what it's like to have a credit card maxed out at the end of the month," Garrett said after the committee vote. "Payday loans are 14 times worse." Establish payday loan regulations on factual basisGarrett's legislation does not create an explicit cap, but extends the repayment period on payday loans from 14 days to six months, which would create the 36 percent limit, a level payday reform advocates have sought for years.Payday lenders have argued they provide a service in markets that traditional lenders do not, and say they would be forced to close at the 36 percent level. Max Wood, a payday store owner and president of Borrow Smart Alabama, said advocates of the cap "were just trying to put us out of business.""If that bill were to pass through both Houses and (get) signed by governor, those people would have nowhere to go," he said. "They would have no solution."Garrett argued in committee that customers end up trapped in debt cycles by taking out loans to service earlier ones."I'm a free market conservative, but I don't think this makes sense," he said.The passage of the bill was applauded by advocates of payday loan reform."The most important thing to me is we're talking about the borrower's personal responsibility, when we don't talk about personal responsibility for lenders," said Shay Farley, legal director of Alabama Appleseed, which has pushed for payday and title loan reform.Advocates also said the six-month extension – rather Continue Reading

Weiner cheers huge rise in small-business loans

THE NUMBER of loans used to pump money into small businesses in Queens jumped 41% this year, according to a study released by Rep. Anthony Weiner. The study showed that more than $69million in loans went to Queens businesses in 2010, compared with $49million last year. The study looked specifically at small-business loans guaranteed by the federal government that are handed out by local banks. A provision in last year's stimulus bill increased the federal guarantee from 75% to 90% of the loan. "It seems like that has worked very well in making skittish banks make more loans to local businesses," said Weiner (D-Queens/Brooklyn). He pointed out that access to credit is "vital" in helping businesses stay afloat and expand during tough financial times. "Given what we are seeing, the fact that the banks are lending more money means they are getting into a more rational cycle, and that's good," he said. "This is the way things are going to get better." On Friday, Weiner visited with Kevin Kim, who secured a $1.3million loan to renovate and expand the Associated Supermarket he operates on Aguilar Ave. in Flushing. Kim created a new fresh fish department and upgraded the produce department. "Before, I had about 30 people working here," said Kim. "Now I have almost 70 people." Kim said the store also offers a larger variety of foods, including more fresh, perishable items. He said the changes would not have been possible without the 10-year loan, which featured an interest rate under 6%. "This is really encouraging for Queens and the city," said Jonathan Bowles, director of the Center for an Urban Future, a think tank that has studied the impact of small-business loans in the city. "For much of the past couple of years, even the most successful small firms were struggling to get the loans that could pull them through until the economy improves," Bowles said. "But there's still a long way to go. Many small firms are still struggling, and a lot more Continue Reading

How to get a small business loan

Getting a small-business loan in this economic climate can be tricky, but it is certainly not impossible with adequate preparation. When they make their decision, lenders will primarily look at your credit history, business plan, education and experience operating the kind of business you want the loan for, as well as the feasibility of the business. This guide will show you what you need to do to get a loan for your small business. Get your finances in order Write a solid business planLook for the right The Small Business Administration ( is a great resource for loan information. In addition, you may be eligible for the SBA guaranteed lending program, which helps lenders make long-term loans to small firms. The lender you select is a personal choice based upon the needs of your business.Choose the loan that's right for will compare rates so that you can find the credit line that is right for your business. Like a loan, you will pay this back with interest. Appendix: Writing a business plan that will land you a loan Executive summaryThis section introduces your business in about two to five pages. It is a very brief summary of your detailed business plan. If you are looking for investors, it is especially important that this part is clear and makes an impact - this may be the only section someone even reads. Make sure readers understand how your business is unique and how it will turn a profit. Write this section last, as it sums up all of your previous sections.The executive summary should include:*The basicsBusiness name, address, industry (e.g., retail), type (e.g., restaurant), founders' names, number of employees*Mission statement *Description of what the business will doThis includes products/services sold and target consumers.*Market/competitive analysis*Marketing/sales strategy*What the company has achieved*History/background of this type of business*Projected sales and profits*Revenue stream*Financial Continue Reading

Grameen America lending women a hand with small business loans

After 11 months - and much doubt about its potential for success - a Queens group that lends money to the poorest New Yorkers has hit the $1 million mark. Grameen America, which reached the lending milestone Wednesday, provides loans for women to start or expand small businesses. What makes Grameen unique is that instead of calling bill collectors to go after overdue payments, Grameen relies on peer pressure. "To make the world poverty-free is a goal of Grameen," Shah Newaz, general manager of Grameen America, said in his cramped office, located above an Indian restaurant in Jackson Heights. "They are the bottom poor people. They don't have any access to any other lenders," he said. Grameen is the brainchild of Nobel laureate Muhammad Yunus, who came up with an idea in the 1970s to help fellow Bangladeshis out of poverty by providing microloans. The concept spread in the developing world, earning the organization and its founder the 2006 Nobel Peace Prize. Grameen began making loans to women in the U.S. in January, starting in Queens. Additional branches are planned in Brooklyn and Nebraska. Alida Ramirez, 31, a Venezuelan immigrant, got a $2,000 loan several months ago. She wanted to expand her business selling gold jewelry and bedding. "With this program I have more time with my daughter," she said. Ramirez, like most of Grameen America's 430 members, also has a second job. She cleans homes. Despite the boot-strapping appeal of the group, some experts have been skeptical of whether Grameen's model can work in industrialized countries. Unlike larger American micro-finance groups, Grameen closely follows its original model created for the developing world - relying on peer pressure rather than collateral. The group currently makes loans to women only. "It doesn't have the power [here] that it has in Bangladesh," said Jonathan Morduch, a New York University public policy and economics professor. "It's much harder to be an entrepreneur here. Continue Reading

Small business loans are specialty for

A couple of years into operating Whisk Culinary, Zak Groh liked what was happening with his business.Sales were rising and major Milwaukee corporations were being added to the list of firms ordering in-flight fare from Whisk Culinary, a caterer that makes meals and snacks for private jet passengers who appreciate fresh food, presentation and eco-friendly packaging.Groh, a chef and founder of Whisk Culinary, didn’t need a huge loan — only $20,000 in working capital to add staff and expand his kitchen operation in West Allis. However, because the company is in the food industry and the loan amount was small, it wasn’t attractive to banks, which prefer financing less-risky businesses and making larger loans.“I had been doing my best to put something together with traditional lenders, but being a food business, pretty much no one wants to touch you because you fall into the category of a restaurant,” Groh said.An accountant suggested he try, a young Milwaukee-based financial technology company that works with banks by handling the smaller business loans banks typically avoid.Groh applied at the website for a loan and soon was talking with co-founder Michael Adam, a former M&I Bank and Associated Bank lender, who wanted to know more about Whisk Culinary and the private aviation in-flight cuisine business.“It was an interview in the sense of what you’re doing, where you’re at and a little bit of my background,” Groh said.Whisk Culinary got a $20,000 loan, and since then, the company has seen annual sales quadruple to about $800,000, Groh said.Although it was the kind of loan banks eschew, it was right in the wheelhouse of at the end of 2013 by Adam,'s goal is to be the No. 1 referral partner that banks turn to when an existing customer or potential new business borrower needs a small loan that doesn’t fit Continue Reading