Apr 04, 2011, Business Lending News
The Fed announced in November that it planned to purchase $600 billion in long-term U.S. Treasury securities in a plan that aimed to lower interest rates and spur borrowing. The policy, dubbed QE2, is scheduled to end in June and some analysts are suggesting its effects are already being felt (Source: U.S. News).
According to a recently published report, as the economic recovery has taken hold, national and local banks are stepping up their small business lending; small business are responsible for around 80% of hiring in the U.S. following economic contractions and their increased borrowing rates could indicate the economic expansion will be sustained throughout 2011 (Source: My Desert).
There are reports coming out of different regions of the country that illustrate the uptick in bank lending and small business borrowing. In Riverside County, California, $94.7 million in small business association (SBA) loans were made during the first three months of 2011, representing a 96% surge from the $48.3 million lent during the first quarter in 2010.
In an effort to take advantage of the rise in borrowing, lenders are boosting their small business lending divisions. Bank of America, for example, announced it will hire 70 additional workers across Southern California to better staff its small business lending offices. Government incentives like the Small Business Lending Fund, which allocated $30 billion for the initiative, are also helping prop up lending.
Wells Fargo said it has extended $871 million in SBA financing to small businesses throughout the country in 2010 - 2011 fiscal year - a 5% rise from the year before. With small business lending on the rise, analysts contend the economic expansion could carry on through the end of the year and into next.