Lending Predictions

With all the economic uncertainty of late – from a great recession to political fiscal cliff battles – a key question is on everyone’s minds: how will small business lending evolve in the coming year?
NerdWallet asked the CEOs of over 30 financial institutions about their outlook on lending in the short and medium term.
1. Many lenders suggest that, despite economic uncertainty, now is the time to build a relationship with a potential lender
“We see signs that [small businesses] are recovering from the 2008 – 2010 economic downturn, and balance sheets and income statements are improving. Those that survived the recession are very good prospects for community banks.”
- President and CEO of Lone Star Capital Bank, Danny L. Buck
“As the economy improves in the San Francisco Bay Area, many consumers and businesses are taking advantage of historically low rates to access credit that has been largely restricted over the past few years. There will be a great opportunity to borrow at low rates as money is available and the market is coming back to life. On the lending side, financial institutions are in need of new loan business to help spur growth.”
- Senior VP and Chief Credit Officer of Meriwest Credit Union, Mark Antonioli
2. Some executives think lending in 2013 is still uncertain, or express cautious optimism
“I think it will be a little better in 2013, but much better in 2014. There are still many macro-economic hurdles (e.g., the debt ceiling) in the way before credit is more widely extended.”
- President and CEO of San Francisco Federal Credit Union, Steven Stapp
“I’m not sure I see [small business lending] evolving that much [from the last year]. I do, however, think that one of the greatest needs that is currently not being fulfilled are lines of credit for under $250,000.”
- President and CEO of New Resource Bank, Vincent Siciliano
“We think time will tell what kinds of signals come from Washington regarding taxation plans; the full impact of the health care reforms; the general future of our country’s debt situation; inflation; and the economy at large. Many businesses need clarity and certainty on the impact of several items beyond their control as relates to their plans to expand, hire additional employees, and take on new debt. However, to the extent our bank can be of service in listening to customers and helping them make informed decisions about their own businesses and the future direction, we are there to listen, offer advice and observations – and then deliver financial solutions that may be desirable.”
- CEO of Community & Southern Bank, Patrick M. Frawley
“In two simple words: cautious growth”
- Senior VP and Chief Credit Officer of Meriwest Credit Union, Mark Antonioli
3. Credit unions express concern about and feel hindered by the lending cap, which prohibits them from making commercial loans above a certain percentage of their asset base
“We often worry about the business-lending cap for credit unions because it limits our ability to grow further into this area…Otherwise, there will continue to be less competition in the small business lending space, which might lead to higher rates and fees.”
- President and CEO of Gesa Credit Union, Christina Lethlean
“With our current projections, CoastHills will hit its business lending cap in 18-24 months. This is unfortunate considering the local pull-back of community banks and big banks in the small business lending arena. Consolidation of financial institutions is having an impact as well. It is also unfortunate that Congress is unwilling to do what they promised on the campaign trail – provide small businesses with the tools they need to prosper. Increasing or removing the business lending cap will do just that – give small business access to billions of dollars in capital, help small businesses create tens of thousands of jobs and all this without costing taxpayers a dime.”
- CEO of CoastHills Federal Credit Union, Jeff York
“Tightened lending requirements have also scared off some business owners by making it more difficult for them to obtain a loan. The [lending cap] increase would make an additional $13 billion available for lending to small businesses. This investment would certainly result in new jobs and economic growth.”
- President and CEO of Texas Trust Credit Union, Jim Minge
4. Many non-traditional lenders are leveraging technology and alternative solutions to fill the gap in available credit for small or unbankable businesses
“We predict that online marketplaces such as Bolstr will be the primary source of capital for many small businesses in the near future.”
- Co-Founders of Bolstr, Larry Baker and Charlie Tribbett
“We serve an underserved market because, even as credit becomes more readily available for some businesses, small businesses that are looking for funding are often unable to acquire a loan. Banks are not willing to take on the risk of lending small amounts, for which revenues will be limited, to a less established business.”
- CEO of American Finance Solutions, Scott Griest
“One trend that I think will continue is that we’re seeing a lot of “bankable” deals coming our way – we receive an increasing number of referrals from traditional banks and financial institutions (e.g., Bank of America, Citibank). Even as recently as 2005, borrowers of non-bank products like ours were more largely non-bankable and had weaker credit, however we’ve been seeing more traditionally “bankable” customers interested in non-bank lending.”
- President and CEO of NewTek Business Services, Barry Sloan

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