The news regarding the business loans industry is always interesting to say the least. We have to wade through reports and statistics issued to support the economic policies of government while trying to get a clear view of the reality facing business owners looking for capital.
So of note is last weeks Treasury report to Congress illustrating the growth trends in new business loans from participating lenders in the Small Business Lending Fund. They point out that those lenders in the fund are doing better than those who are not, which proves that the government backed program is worth all the fuss.
While it is true that the last quarter of 2011 shows over $1 billion in growth over the third quarter, and nearly $5 billion over the program baseline average, but what do the numbers really mean?
Remember, the Fund was created to encourage growth and hiring from business owners by granting easier access to business loans. The program was designed to absorb some of the risk of participating lenders adjusting limits and streamlining their origination process. But the recent numbers could just be a sign of the times because the baseline used to assess the program was made by using the average numbers from the 4 quarters immediately preceding the Act’s start date. If nobody was borrowing due to the credit crunch then it is hard to verify that the lenders are more willing to lend as a direct result of the Act.
As with most reports to Congress, the facts are presented in a positive light and the sheer number of statistics is overwhelming. To think members of Congress actually understand how the program works and how to judge if it continues to be successful, is asking a lot from our “elected” officials. But, the numbers certainly add up and politicians who have taken credit for the creating the Small Business Lending Fun can now bask in the glory of taking pictures of each other shaking each other’s hands in front patriotic landmarks in their districts.
However, if the increased business loans are indicative of anything, it would be to serve as proof that most of us are being left out in the cold. The Small Business Lending Fund provides easier access to business loans for very well qualified borrowers who would have been able to secure financing without its existence.
The average business owner in America is not well qualified and not attractive to lenders. So what we hear on the news, of C-SPAN for that matter, is not necessarily a valid assessment of what is happening on the front lines. It is true that any good news about the economy serves as a vote of confidence for business owners and consumers alike, but does it accurately reflect the experiences of mainstream American’s? Let us know what you think.