Journalist seeks sources for story on credit crunch for small businesses; can you help?
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We at the Reynolds Center get queries from journalists seeking help with business stories, and we try to offer ideas and sources. We got one yesterday from a journalist in Wisconsin, who wrote:
“Folks starting up businesses say it’s impossible to get a commercial construction loan from any bank in the State of Wisconsin right now. Aside from calling every bank, is there an easier way to track lending? Not to mention most probably won’t comment.
This all started with one business. This man has been a hotel developer for 35 years, but always for other companies. When he went out on his own, he ended up having trouble getting money and now has a half-built hotel.
Obviously there might be a bigger story, and that would have to come with identifying other folks having trouble, but I was curious if there was a way to get numbers.”
Here’s what I suggested:
“You’re in luck in that the Federal Reserve just put out a survey, based on interviews done in July, of bank lending officers. Mary Beth Chosan is the author, and the Fed’s main number is (202) 452-3000. She might be able to tell you whether the data goes down to the state level.
As you can see, the upshot is that banks say they are loosening loan standards for small firms (those with annual sales of less than $50 million).
However, most banks are still reporting lackluster demand for credit, according to AP’s story on the report.
The Fed also held a conference on July 12 about the problems of tight credit for small businesses. There are some clips from it on You Tube. And here’s a summary of what was said.
And here’s a USA Today story on how construction loans are “the worst bet in real estate today.”
You also need more businesspeople who say it’s a problem. One possible starting point is SCORE, an organization of volunteers who counsel small business owners. You can enter a ZIP code on its website to get your local chapter. Another possibility is all the local trade and commerce associations: the chamber, the ethnic chambers, any local groups of contractors or real estate developers or retailers. You can also tap into searches on social media.
On the commercial real estate front, here are three private firms that track data that might be willing to give you some Wisconsin info on distressed properties:
Trepp LLC –New York firm that tracks data on the commercial mortgage-backed securities (CMBS) market.
Realpoint LLC – Horsham, Pa., firm that rates CMBS. Recently purchased by Morningstar.
REIS – New York firm that tracks real estate performance, e.g., vacancy rates nationally and regionally, leasing trends, investment-sales activity.”
YOUR THOUGHTS?
Would those of you who have covered the credit crunch have other ideas to aid this Wisconsin journalist? Please offer a comment below.
All of Linda’s suggestions are excellent.
I would add:
1) Talk to your state banking supervisor. His or her office may have insight into credit, lending, local conditions, etc.
2) Same with the state community bankers association. Often this trade group is headed by an experienced banker or can point you to the right bankers.
3) It may be that “no” small businesses can get loans, but be skeptical. Standards have been tightened, but some credit-worthy firms may be doing ok. See if you can find them, especially “touchstone” firms readers might recognize.
4) Look for context and deeper causes. E.g., lots of smaller banks on the edge in the state, thus holding back lending (and smaller banks tend to lend to small biz). Or too much concentration of big banks that don’t do that much of it? Also, commercial real estate, which is in a mess.