We find ourselves in the middle of one of the greatest wealth transfer periods of all time. Those with wealth must decide whether they want to make transfers, and if they do, they must decide how much, to whom, when and in what structure?
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The mixed news was delivered Dec. 3 at the Colorado Business Economic Outlook 2013 during a panel titled “Small Business Financing in the 2013 Economy.”
The economy is healthy enough that small businesses should be optimistic, said Mark Abell, senior vice president of small-business development at Vectra Bank Colorado. But banks are constrained and could remain tightfisted.
“I’m bullish on small business, I’m cautiously optimistic about small-business lending,” he said.
The pressure largely is coming from federal regulators, who are in the process of implementing the Dodd-Frank Act and the Basel III international banking regulations, Abell said.
The new regulations have several consequences that affect banks of all sizes and change what they can offer small businesses, both in terms of money and attention, Colorado Bankers Association president Don Childears said.
Banks’ staffs are spending a lot more time on compliance issues, meaning they have fewer resources to devote to working with clients, Childears said. They also have to keep a greater share of capital in reserve, which means they have less money to lend.
Banks at the moment actually are competing with each other to lend to established businesses with very good credit, Childears said.
New companies that present a greater risk will find it harder to get loans. Founders of small businesses should expect very close scrutiny, Abell said.
Small businesses with good credit that might need money soon should start working on getting a loan now, Childears said.
“Hurry and get that loan before all the new regulations kick into effect,” Childears said.