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Friday, October 29, 2010
Thursday, October 28, 2010
For Small Business, Slow Gains In Credit
WASHINGTON—The worst may be over for small businesses struggling to obtain credit, but this important corner of the financial system doesn't show signs of recovering very quickly, according to officials and business leaders who gathered at the Federal Reserve for a one-day conference.
"Overall, the survey data seem to suggest that current economic conditions for small businesses, though still quite challenging, are less dire than they were in 2009," said Robin Prager, an assistant research director at the Fed, at the forum on small-business lending.
![[bernanke]](http://si.wsj.net/public/resources/images/OB-JF535_bernan_D_20100713094129.jpg)
Getty Images
Small business owners and the groups that represent them said they haven't seen lenders becoming more lenient. "It still feels very depressed," said Leslie H. Benoliel, executive director of the Philadelphia Development Partnership, one of the area's largest providers of micro-enterprise business advice.
In his opening remarks, Fed Chairman Ben Bernanke acknowledged the continuing depressed state of the lending market. "The formation and growth of small businesses depend critically on access to credit. Unfortunately, those businesses report that credit conditions remain very difficult."
The forum is the culmination of a fact-finding mission the Fed began in February to identify how to improve credit for small firms. Fed officials have hosted more than 40 meetings around the country with small businesses, bankers and community leaders to identify obstacles to obtaining credit. One major problem has been a lack of data that could help determine whether the problem is based on lack of demand for credit, tight supply or some combination of the two.
While major banks eased loan conditions for big firms during the first quarter, lending standards remained tight among the local banks on which small businesses rely, according to the quarterly Fed survey. Similarly, a survey by the National Federation of Independent Business found that the proportion of firms reporting tighter credit conditions over the past three months remained "extremely elevated," Mr. Bernanke said.
He cited data showing that loans outstanding to small businesses have declined to less than $670 billion in the first quarter of 2010 from about $710 billion in the second quarter of 2008.
Mr. Bernanke noted that small businesses are essential to job creation, saying that data show that small firms employ roughly one-half of all Americans and account for about 60% of job creation. "Making credit accessible to sound small businesses is crucial to our economic recovery, and so should be front and center among our current policy challenges," he said.
Some lenders argued the current lending standards are a return to more normal conditions following a period of laxity. "I keep hearing remarks that credit standards have tightened, and I don't believe that," said forum panelist Jack Hopkins, president and chief executive of CorTrust Bank N.A. and director of the Independent Community Bankers of America. "I need to make loans to survive, to make money."
Other lenders at the conference said they were ready and willing to work with borrowers, but that some small firms were sitting on cash and afraid to invest in an uncertain economy.
"That comment floored me," said Selma Taylor, executive director of California Resources and Training, a group that advises small business. "The market I'm dealing with, people don't come to me when they're sitting on cash."
"Overall, the survey data seem to suggest that current economic conditions for small businesses, though still quite challenging, are less dire than they were in 2009," said Robin Prager, an assistant research director at the Fed, at the forum on small-business lending.
Getty Images Federal Reserve Chairman Ben Bernanke sits with participants Monday after speaking at forum on small-business financing.
Ms. Prager, citing the Fed's Senior Loan Officer Opinion Survey, said weak demand from businesses and banks' still-stingy credit rules made lending tight. But the most recent April survey showed that bank lending standards for small businesses stopped tightening in the first quarter, after tightening sharply throughout 2008 and 2009.
In his opening remarks, Fed Chairman Ben Bernanke acknowledged the continuing depressed state of the lending market. "The formation and growth of small businesses depend critically on access to credit. Unfortunately, those businesses report that credit conditions remain very difficult."
The forum is the culmination of a fact-finding mission the Fed began in February to identify how to improve credit for small firms. Fed officials have hosted more than 40 meetings around the country with small businesses, bankers and community leaders to identify obstacles to obtaining credit. One major problem has been a lack of data that could help determine whether the problem is based on lack of demand for credit, tight supply or some combination of the two.
While major banks eased loan conditions for big firms during the first quarter, lending standards remained tight among the local banks on which small businesses rely, according to the quarterly Fed survey. Similarly, a survey by the National Federation of Independent Business found that the proportion of firms reporting tighter credit conditions over the past three months remained "extremely elevated," Mr. Bernanke said.
He cited data showing that loans outstanding to small businesses have declined to less than $670 billion in the first quarter of 2010 from about $710 billion in the second quarter of 2008.
"We fell into a 100-foot well, and we just stopped falling," said Zoltan Acs, an economist with the Small Business Administration, during a panel at the forum. "How do we get out? I guess the recession is over, but there's a lot of damage to the economy."
Some lenders argued the current lending standards are a return to more normal conditions following a period of laxity. "I keep hearing remarks that credit standards have tightened, and I don't believe that," said forum panelist Jack Hopkins, president and chief executive of CorTrust Bank N.A. and director of the Independent Community Bankers of America. "I need to make loans to survive, to make money."
Other lenders at the conference said they were ready and willing to work with borrowers, but that some small firms were sitting on cash and afraid to invest in an uncertain economy.
"That comment floored me," said Selma Taylor, executive director of California Resources and Training, a group that advises small business. "The market I'm dealing with, people don't come to me when they're sitting on cash."
Wednesday, October 27, 2010
New Federal Boost For High-Speed Rail
California will receive an additional $902 million for high-speed and other intercity rail projects - including $715 million in the San Joaquin Valley and $16 million on the Peninsula, federal officials said Monday.
The news, conveyed to members of Congress by Transportation Secretary Ray LaHood, is not expected to be officially released until Thursday, when further details will also be revealed.
Rachel Wall, a spokeswoman for the California High-Speed Rail Authority, declined to comment on the funding or elaborate on the projects selected until the official announcement.
"But I am sure it will be part of the criteria the board would use to determine where construction of the system will begin," she said.
The authority board is scheduled to decide this year which segment - San Francisco to San Jose, Merced to Fresno, Fresno to Bakersfield or Los Angeles to Anaheim - will be built first. Earlier this year, federal officials announced that California would receive $2.25 billion for high-speed rail. Aside from $400 million devoted for the Transbay Transit Center, federal officials want that first allotment of money to focus on a single segment.
The $902 million revealed Monday will be split among 18 projects, but the bulk of the money will go to high-speed rail in the San Joaquin Valley. No further details were given. Some $100 million will go for acquisition of locomotives and rail cars, but it is not clear if those will be designated for high-speed rail.
The next largest piece of new funding - $25 million - is set aside for adding an advanced train control system in San Diego County, which is not part of the planned first phase of the $43 billion high-speed rail line from San Francisco to Anaheim scheduled to open in 2020. The San Francisco to San Jose high-speed rail segment is slated to receive $16 million.
A number of other allotments are either for existing intercity rail lines or for rail planning studies. In addition to the train control system, San Diego County was awarded $21 million for three rail improvement projects, including adding a second track in some locations and making signal improvements.
Earlier this year, Gov. Arnold Schwarzenegger proposed a demonstration project that would upgrade the Los Angeles to San Diego section of the Pacific Surfliner rail line to run trains at higher speeds but still far slower than the 220 mph that high-speed trains would travel. The governor said the faster trains would demonstrate the promise of high-speed rail and build enthusiasm for the system.
The awards Monday - part of a $2.25 billion federal program - also include $3.4 million for rail plans in four California corridors and $500,000 to plan for multistate high-speed trains into Nevada and Arizona.
Some critics of the Obama administration criticized the nature and timing of the funding revealed Monday as a political ploy to gain support for Democratic candidates in next week's midterm elections.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/10/25/BAUM1G1SQQ.DTL#ixzz13ZmdhPVE
The news, conveyed to members of Congress by Transportation Secretary Ray LaHood, is not expected to be officially released until Thursday, when further details will also be revealed.
Rachel Wall, a spokeswoman for the California High-Speed Rail Authority, declined to comment on the funding or elaborate on the projects selected until the official announcement.
"But I am sure it will be part of the criteria the board would use to determine where construction of the system will begin," she said.
The authority board is scheduled to decide this year which segment - San Francisco to San Jose, Merced to Fresno, Fresno to Bakersfield or Los Angeles to Anaheim - will be built first. Earlier this year, federal officials announced that California would receive $2.25 billion for high-speed rail. Aside from $400 million devoted for the Transbay Transit Center, federal officials want that first allotment of money to focus on a single segment.
The $902 million revealed Monday will be split among 18 projects, but the bulk of the money will go to high-speed rail in the San Joaquin Valley. No further details were given. Some $100 million will go for acquisition of locomotives and rail cars, but it is not clear if those will be designated for high-speed rail.
The next largest piece of new funding - $25 million - is set aside for adding an advanced train control system in San Diego County, which is not part of the planned first phase of the $43 billion high-speed rail line from San Francisco to Anaheim scheduled to open in 2020. The San Francisco to San Jose high-speed rail segment is slated to receive $16 million.
A number of other allotments are either for existing intercity rail lines or for rail planning studies. In addition to the train control system, San Diego County was awarded $21 million for three rail improvement projects, including adding a second track in some locations and making signal improvements.
Earlier this year, Gov. Arnold Schwarzenegger proposed a demonstration project that would upgrade the Los Angeles to San Diego section of the Pacific Surfliner rail line to run trains at higher speeds but still far slower than the 220 mph that high-speed trains would travel. The governor said the faster trains would demonstrate the promise of high-speed rail and build enthusiasm for the system.
The awards Monday - part of a $2.25 billion federal program - also include $3.4 million for rail plans in four California corridors and $500,000 to plan for multistate high-speed trains into Nevada and Arizona.
Some critics of the Obama administration criticized the nature and timing of the funding revealed Monday as a political ploy to gain support for Democratic candidates in next week's midterm elections.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/10/25/BAUM1G1SQQ.DTL#ixzz13ZmdhPVE
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