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CPBJ Extra Blog

Can SBLF repair finances and relationships at the same time?

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Perhaps the purse strings of banks that do small-business lending are finally loosening, through a still-new program.

The U.S. Department of the Treasury announced this week in a new report that borrowing in the Small Business Lending Fund (SBLF) has increased by $10.4 billion over baseline levels since the hardest times of the recession and by $1.4 billion from the first quarter of 2013.

The report analyzed funding rates through the second quarter of 2013. Baseline levels are the four quarters of small-business lending ending June 30, 2010.

In Pennsylvania, SBLF participants hiked their lending by $542.6 million over those baseline levels, with a $63.8 million increase in the second quarter.

Midstate lenders that participate in the SBLF are Codorus Valley Bancorp Inc., which is the parent company of PeoplesBank; Jonestown Bank and Trust Co.; AmeriServ Financial Inc.; Centric Financial Corp.; Community First Fund in Lancaster and York Traditions Bank, according to the U.S. Department of Treasury, which administers the program.

This week, Glenn L. Wilson, president and CEO of AmeriServ, specifically mentioned the growth of the SBLF as a catalyst for a successful third quarter in which earnings per diluted share at his bank went up 20 percent compared with the third quarter of 2012.

In the state, there are 23 lenders at 155 locations that participate in the SBLF program, a dedicated fund designed to provide capital to qualified community banks and community development loan funds in order to encourage small business lending, according to the Department of Treasury.

Eligible banks are banks, thrifts, and bank and thrift holding companies with consolidated assets of less than $10 billion.

The program started in 2010 as a way to help small businesses get the capital they need to invest and hire, according to the department.

Since the start of the recession, the biggest gripe I've heard and keep hearing from small businesses is that they just can't get credit. As they're trying to ride out the hard times until their customers decide it's safe to start spending again, they've needed capital improvements or just cash infusions to stay open. Some weren't able to.

And if there is a bigger gripe that I've heard, it's that some banks just haven't been there for those small businesses over the last five years. The same banks that smiled and shook hands 20 years ago when that business owner started the operation, the same banks that gleefully accepted monthly mortgage checks and said, "Whenever you need us, we'll be there for you" ... some of those businesses owners in some cases felt deserted by their banks as businesses looked for a little leeway in getting credit.

From their point of view, the banks weren't trying to be the bad guys in touchy lending situations. They knew their small-business customers were hurting, but they were hamstrung by the increased lending regulations immediately put into place to help protect against another recession. this seems contradictory -- maybe you didn't intend to, but the previous graph makes it sound like banks were intentionally unresponsive, but now you're sort of saying they wanted to help but were constrained by regulation -- not contradictory, I don't think, just trying to show both sides of the coin --MS

I haven't stopped hearing the gripes, incidentally. For as big as the numbers sound for SBLF, I haven't heard many (any?) small businesses mention they've taken advantage of it.

But hopefully, the SBLF isn't just bridging that funding gap small businesses lacked, but also helping repair bank-customer relationships that many times have existed through generations.

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