Small businesses at the Shore were approved for more loans at the end of last year, the U.S. Small Business Administration said Wednesday, in a sign that the tight credit standards may be thawing.
Forty-nine Monmouth and Ocean county businesses received SBA-backed loans worth $18.1 million during the last three months of the year, up from 35 businesses that received $16.7 million the same quarter the previous year, the SBA reported.
"We do see trends that indicate the worst is behind us, and we're hopeful this trend we're establishing continues on," said James A. Kocsi, director of the SBA's New Jersey district.
Small-business lending plummeted the past two years as banks, stung by bad loans, tightened their standards. It made it tougher for small businesses to buy equipment, pay workers and fuel the economy.
To jump start lending, the federal government as part of the economic recovery act provided $730 million to the SBA at least partly to eliminate and reduce fees and guarantee up to 90 percent of a loan. (The SBA previously guaranteed 75 percent to 85 percent of a loan.)
The incentives will remain until the end of February. But Congress may extend them through the end of the year.Small-business owners say the credit market remains tight. Seaside Materials Inc., a Long Branch company that sells masonry building supplies, recently was forced to search for another lender after its long-time bank called in its line of credit, said Anthony Damiano, the company's chief executive officer.
The company saw sales fall 60 percent during the recession. And even though it cut expenses just as rapidly and never defaulted on a loan, it couldn't convince other banks to work with it, Damiano said.
The company, however, caught a break when Basking Ridge-based Affinity Federal Credit Union agreed to lend it about $580,000 — most of which will be guaranteed by the SBA.
"I found (Affinity) to be very communicable, especially in these times, because a lot of banks aren't doing anything right now in terms of looking out for small businesses," Damiano said.
TD Bank remained the biggest SBA lender, both at the Shore and in New Jersey. But three other banks that aren't household names — BNB Bank, Indus American Bank and Innovative Bank — were among the biggest SBA lenders in New Jersey.
Kevin McCloskey, vice president of lending at Affinity, said the credit union became an SBA-approved lender just last year, hoping the banking industry's credit crunch would allow it to make more business loans — and add customers.
All but one of its new customers "are being asked to leave the bank they're at now," McCloskey said.
