That is the title of an article in the WSJ last week and the quote is attributed to uber-banker Jamie Dimon. His comment appears to have been taken out of context (he was talking about the new regulatory capital proposal), but the article goes on to discuss the precipitous drop in commercial lending our industry is seeing.
Our own experience at Gulf Coast Small Business Lending is different; our SBA loan pipeline is swelling. In fact, we are seeing and closing some of the best loans we have seen in over three years. There is a dichotomy between Wall Street and Main Street and we attribute our experience to the following:
- Entrepreneurs are an impatient bunch: After sitting on the sidelines for over two years, the operators we work with are simply tired of waiting. Business plans have been revised and revised again to incorporate slower-growth and the numbers work.
- The outlook is positive: While bumps in the road are expected (isn’t that always the case?), a slowdown is expected to be short and shallow. In my opinion, the Fed has done a masterful job getting us through the COVID crisis and bringing down inflation and I expect them to continue performing and getting us back to faster growth once inflation has been tamed.
- Comfortable taking on “expensive” debt: Related to point #1, borrowers are comfortable taking on debt with rates exceeding 10%, believing that the business can afford it and knowing that rates will begin to come down in a year or so, allowing them to refinance at a future date or in our case, take advantage of a variable-rate loan.
- New SBA rules: The US Small Business Administration (SBA), our partner in making the loans we make, has very recently liberalized its lending rules, making the loans more accessible to a wider audience and giving us the ability to structure loans we couldn’t do before.
- Working with a good lender: Yes, this last bit is a little self-indulging, but I really believe that having a good lender, backed by a strong financial institution like Gulf Coast Small Business Lending, is crucial to navigate the complexities of today’s economy and to take advantage of the new SBA rules. Our team of SBA professionals is highly experienced and is prepared to assist entrepreneurs structure deals to their unique needs.
So don’t believe the headlines, or at least not all of them! If you are passionate about buying or growing a business, buying owner-user commercial real estate, or consolidating ownership (buying out a partner, for example), there are lenders out there who would love to work with you. Gulf Coast Small Business Lending is here and ready to help.