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Independent Community Bankers of America chief economist Paul Merski explains what will increase lending for small businesses.
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Rich thanks.
Small business says it is still tough to get bank loans -- banks claim that loan demand is still down -- -- are actually blaming Washington regulation.
-- -- chief economist for Independent Community Bankers Of America pop thanks so much for joining us.
You know would -- that they can't get -- because of increased regulation what I mean from a practical point of view I mean when does that mean there's so much more paperwork.
Does it mean it's harder call I mean act how to how -- how does that translate.
Nothing is more important to community banks and our economy then small business lending small business lending is the bread and -- -- -- community banks so we wanna make as many small business loans as possible.
But in the examination of the why small business loans aren't being.
Made as much as possible.
Regulation keeps coming up as one of the factors and we all have to work together -- have reasonable regulation.
But regulation in way -- not choking off.
Important small business lending.
So Paul from a practical point of view what does that mean if somebody is going into trying get a loan -- this this -- small business.
And regulation is getting in the way what does that look like does -- mean it's more paperwork does it mean it's harder to qualifier how do you know it's regulation.
Com it's always harder to get -- Always harder to get more loans when you have high eight regulation.
What happens is a qualified -- comes in.
But the bank regulators off friends say that you shouldn't make that loan because -- over concentrated in that area of lending.
For that were requiring more capital -- and and less leverage at the bank so.
Community banks want to make as many quality.
Loans as possible by dealing with new costlier regulations which -- -- -- the ones they have available for lending.
All -- lending that the real problem is that if regulators want to squeeze out.
All the risk out of the banking -- sector.
On then they'll end up squeezing off credit and choking off credit because.
Bank lending is about judging risk not completely eliminating risk.
You don't we we went back we look at some of the -- we got that we got some data from facts that which shows we're looking at the screen right now which shows that.
Lending to small and medium size business is actually on the rise again right now since the -- I mean it's not back to where it was before the crisis became kind of wouldn't.
Expected to be because may be lending standards were to move us back that.
What does -- think that we're not doing enough blending right now.
Well that's a very good sign and community banks are increasing their lending levels.
What really needs to happen is we need a little bit more robust economic growth we need a little less regulation.
And if we get that I think community banks are went very well positioned.
To continue increasing lending their well capitalized.
They have plenty of liquidity.
And we need the quality loan demand there from the small business sector.
As the economy grows and we could all create more jobs together.
I've talked a lot of small business owners who say that they're not hiring are taking out loans right -- they just don't know what the demand for the products are gonna be like that the economy isn't that strong.
So they don't wanna go out a limb and take -- loan and take the risk that they're really gonna have a customer out there I mean.
Are you sure that there's really more demand out there for more -- There is that ran for lending and there's the capacity to meet that but I think you hit the nail on the head you have to have.
Strong consumer confidence we have to see better job growth.
We have to see a little bit more robust growth in the economy before our small business is.
And our community banks can get back to the robust levels.
Credit flow and job creation and lending that's going -- benefit all of us a -- -- market thanks so much for joining us.
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