What Does The Current Small Business Lending Environment Look Like?

Small Business Financing Expert Tony Smith Senior Wells Fargo Commercial Loan Officer Wells Fargo is the #1SBA Lender in America (By volume). Uniquely, we are a direct SBA Lender which means we make a base decision at the bank level. In fact, the team I work with (The five of us) were recently honored as being the # 1 team in California - one of our Commercial Loan Officers was ranked #1 as an individual for 2009 (nationally). For qualified businesses, Wells Fargo is aggressively funding small business loans. Where there is a real disconnect is criteria and qualification. Now that we are two years into the crisis, we are seeing that many small business owners have lost their credit strength; collateral has decreased in value; personal debt and business debt (lines of credit and credit cards) have increased. This has caused many business owners to fall out of credit range. But that does not mean that we are not lending - we are. The media has over-done the story about the lack of funds - banks want to loan money to those who qualify - that is how they earn a profit. Criteria and qualifications change all the time so it would not be appropriate to quote any particulars, but generally speaking, small business owners (as of the time of this message), need a 640 FICO as a minimum, plus be strong in the other 5 C's of credit. We do fund start-ups but the criteria changes a bit. Each loan applicant is unique (Borrower credit, business type, collateral, debt to income, debt service coverage, use of funds, purpose of the loan, etc.). That is why we take an application - we must be able to make an informed decision. To directly answer your question about the "new program," this is what was published by the White House in February: http://www.whitehouse.gov/sites/default/files/FACT_SHEET_Small_Business_Lending_Fund.pdf And while I think it is a wonderful idea to pump money into the system in order to fund more small business loans, it DOES NOT alleviate the criteria/Qualification issue - it does provide competition amongst banks. No matter how much money is pumped into the system to community banks, if a client is not qualified, the government will not be able to help them unless people PAY DOWN DEBT & INCREASE CASH FLOW. The existing SBA guarantee program is sufficient help from our government. It helps stimulate the economy and creates jobs - more bank competition does not help the situation - more guarantees from the SBA would be helpful including extensions of the current programs such as waving of fees and increased loan guarantees (currently 90%). Please note that these are my personal opinions as a 16-year veteran of small business lending and are not an official Wells Fargo response.