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Bank Lending Today

Written by CMG News Contributor, Doug Carleton

A recent headline on the “Heard on the Street” column of the Wall Street Journal was “Banks Need to Lend.” My first thought was, where were they when I needed them? But I quickly got over it and back to today. I was a little surprised by the headline since, in the small business world, the problems are usually more along the lines of "why banks won’t lend to more small businesses." But since the column was particularly about bank stocks, it didn’t matter because the larger message was clear. Banks are holding large amounts of cash, loan demand is weak, and the Fed is going to keep interest rates low for the foreseeable future: meaning that banks will hardly be able to increase their net interest margins on their loans. So what are the banks to do?

They can lend it to you. You may not need to borrow anything, and borrowing just because you can or because rates are so low would be foolish. But, if your business is healthy and future developments, such as another location, taking on additional products or upgrading machinery and equipment) would be enhanced by a new loan, there has never been a better time in my forty-plus years in and around the financing industry to borrow money. It also offers the opportunity to pay off high-interest loans or refinance existing loans to obtain a longer amortization to increase your cash flow. A bank may be interested in your business if your credit is good and your business is healthy, regardless of the toughness of this past year, your realistic projections show potentially significant growth in revenue and profits that you could achieve with new financing.

All signs are pointing to a strong second half of the year for the economy. Even if we are getting whipsawed now by the economy slowing again, better days are ahead. Consumer savings rates are at the highest level since 1975. Last month alone saw the personal savings rate rise 13.7%. All of this cash is like water building up behind a dam. When it breaks, it’s likely to be significant.

The aircraft is getting ready to leave the gate and taxi to the end of the runway for takeoff. Don’t miss the flight. The bank could help you be on it.


This blog entry is a slightly edited excerpt from Doug Carleton's 'The Daily Life Of A Small Business Owner' series. Doug was a mentor with SCORE, Startup Virginia, and Lighthouse Labs, and has 25+ years of experience in small business finance including 12 years in SBA lending. To contact Doug directly, please email him at

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