Banks Have Money To Lend!

In case you've been asleep the past couple of years, major changes have happened in the banking industry. Big names, like Merrill Lynch and Wachovia, were rolled into Bank of America and Wells Fargo, respectively. Citigroup became tied to the federal government. Some small regional banks still exhibit some signs of weakness, and more changes lie ahead as the banking industry battles government regulations.


Today Bank of America and Wells Fargo report $3.1 billion in earnings and Citigroup $2.7 billion, up significantly in the 2nd quarter of 2010 compared to the same period in 2009, according to a September 15th USA Today article in the Money section.


The problem for business owners, we've found, is that bank loan volumes are down, close to 15 million workers remain jobless, and the perception is that banks are very tight about loaning money. They appear to be continuing to stockpile their excess reserves rather than lend it. Paul Ashworth, senior US economist with Capital Economics, reported current bank reserves are $1.03 trillion, up $171.7 billion in the past year.


Ashworth wrote: "...banks could make new loans worth roughly $3.5 trillion..." but "...are very cautious about increasing the supply of their new loans."


On the positive side, banks are reporting that, for the first time since 2006, they are "making more credit available to small businesses."

What fails to be reported is that banks are more strictly regulated. In most cases, they are required to have a comprehensive business plan from a potential loan applicant before they can consider that commercial loan. Many banks are avoiding start-up businesses, leaving budding entrepreneurs to fend for themselves. The focus is on helping existing business owners expand their operation or add new product lines.

Banks want to lend money and help get our economy moving again, so it is vital that business owners bring in professional business planners to review and update existing business plans or create a new, market-based and viable operating plan to obtain funding.

Halloween may be getting closer, but the business planning process and securing financing is far from scary with professional assistance from a firm such as Fluidity Business Planning Group.