IN-DEPTH: Local bankers see rebound in lending

Page 2 of 3 – Theres a general feeling that things are getting better, he said. Its not only on just the retail side, but wholesale and commercial, too. Larger companies are feeling better and ordering more from our small businesses.

Reaves started seeing a positive change in 2014 and 2015. Last year certainly was an improvement, he said, adding that has continued for the first three months of this year. Were definitely seeing an up tick in small business applications for expanding or going into business.

While small businesses can be defined to include up to a few hundred employees, Reaves defined most in Southwest Missouri as having far fewer.

We are seeing improvement of anything classified as a small business, he said. By and large, the majority of what we are talking about are 10 (employees) or less.

Reaves is noticing that more people are going into or buying a business than expanding an existing business, which most often is seen in manufacturing. While interest is increasing, he noted that what banks need to see before lending money hasnt changed.

For someone starting a business, its still a matter of having a solid backup plan, which would mean equity youre going to put in the business, experience in that line of business and collateral outside of the business, he said. Its still hard to get financing for a start-up.

Reaves said most of the business loans hes seeing approved are non-SBA, although CBT and other area banks are SBA lenders.

Like Arvest, CBT most often approves loans in the $150,000 to $200,000 range, according to Reaves.

With those small business loans, youll typically see the smaller dollars, he said of loans for business acquisition and buying inventory or equipment.

Right now, Im talking to a customer wanting to buy one piece of equipment thats $100,000, plus another wanting to buy a business for $300,000, so with equity, the loan would be about $200,000, he said. For a small business, thats often the sweet spot for a loan.

SBA loan growth

Arvest Bank reported a spike in Small Business Administration (SBA) loan activity for the second consecutive year in 2015, with a 23 percent increase in loan approvals and a 45 percent jump in loan volume.

Arvests 7(a) loan approvals for the SBA fiscal year ending Sept. 30 was 187. Thats up from 152 in 2014. These loans are the SBAs primary means for helping startup and existing small businesses deal with a variety of general business purposes.

The banks SBA 7(a) loan volume, meanwhile, was $49.7 million in 2015, up from $34.2 million in 2014. The 2015 volume is Arvests highest since it had $41 million in 2012.