LOCAL ECONOMIC SNAPSHOT | SMALL-BUSINESS LENDING

Loan activity still recovering

By HANAH CHO
Staff Writer hcho@dallasnews.com

By TOM SETZER
Staff Artist tsetzer@dallasnews.com

Borrowing by U.S. small businesses has not rebounded yet to pre-recessionary levels. Small-business lending took a huge hit during the financial crisis as banks pulled back and entrepreneurs curtailed hiring and expansion. Loan activity began inching up in the last two years.

Thomson Reuters/PayNet Small Business Lending Index

The index measures the volume of loans to small businesses based on new originations by major lenders. The index typically correlates with economic growth two and five months in advance. 150

January 2007: 131.7 125 November 2012: 108.3*

100 January 2005: 100

75

May 2009: 66 50 2005

*Preliminary

2006

2007

2008

2009

2010

2011

2012

Small Business Administration-backed loans in D-FW

SBA loans peaked in the fiscal year ending in September 2007 as the economy began slowing. Funding reached a record level in fiscal year 2011 mostly because of loan enhancements under the Small Business Jobs Act.
(The federal fiscal year runs between Oct. 1 and Sept. 30)

Number of loans
4,000 2007: 3,305 3,000 2,000 1,000 0 2003: 2,459

Value of loans (in millions)

$1,000 $800 $600 2003: $573 million $400 2012: 1,448 $200 0 2012: $617.7 million 2011: $882.6 million

03 04 05 06 07 08 09

10

11

12

03 04 05 06 07 08 09

10

11

12

First quarter of FY2013 SBA lending up

The Dallas-Fort Worth region saw a bump in loan and dollar volume compared with a year ago, a positive sign for the remaining fiscal year. I Fiscal year 2012 I Fiscal year 2013

Top five SBA lenders in D-FW

Fort Worth-based Southwest Bank is the only local financial institution that cracked the top SBA lenders in North Texas. The other four are either national banks or based out of state.

Number of loans
160 140 120 100 80 60 40 20 0 October November December

Value of loans (in millions)

$100 $80 $60 $40 $20 0

Value of loans (in millions)

$60 $50 $40 $30 $20 $10 0 JPMorgan Wells Fargo Compass Bank, Bank, Chase Bank, National 333 loans National Association, Association, 113 loans 262 loans Wilshire State Bank, 30 loans Southwest Bank, 22 loans $47.7 million $42.7 million $40.9 million $24.8 million $23.3 million

October November December

SOURCES: Thomson Reuters; PayNet; U.S. Small Business Administration

The bottom line

The volume of lending to small businesses has increased dramatically in the past quarter. Its very encouraging. The key is we need to continue this. Most small-business owners we talk to in North Texas are confident about 2013. Using credit and taking advantage of this very favorable rate environment is key to their expansion plans going forward. They've shored up their balance sheets with reinvested earnings and are in a good position to use credit, including some very attractive SBA programs, to grow. The early signs of an uptick in SBA-backed loans in North Texas are encouraging despite talk about the so-called fiscal cliff. It will be interesting to watch how further negotiations over taxes and the deficit will impact small-business lending in 2013.

Herbert Austin, director of SBAs Dallas-Fort Worth District office

Susie Leinbaugh, head of Chase business banking for North Texas

Hanah Cho, staff writer, The Dallas Morning News