Print
Email Story
OLYMPIA -- Gov. Chris Gregoire again is telling Congress to "get it done."
Two weeks ago the message was about health care reform, but on Monday her attention was focused on the economy and the need to get credit flowing to small businesses.
The way to do that is for Congress to enact a proposal from President Obama to use $30 billion to shore up community banks and spur lending to small-business owners who want to expand and create jobs.
"As I said in my State of the State Address, the way out of the recession is putting Washington state back to work, and the way to do that is creating jobs," Gregoire said. "Small businesses are looking to community banks for credit to stock their shelves. ... If we can't get that credit flowing, small businesses are not going to succeed."
Jim Pishue, president and CEO of the Washington Bankers Association, said commercial lending has stalled as banks haven't had enough capital or liquidity to make loans, and borrowers have been leery of taking on debt during a lengthy recession.
Regulators have cracked down on community banks and required them to have more cash on hand to make commercial loans, but the cash isn't coming in through investors or profits.
"It hinders your ability to go out and lend," Pishue said.
But an infusion of cash from the government would allow community banks to make more small business loans at more desirable terms, perhaps spurring skittish business owners to start borrowing again to pay for equipment or expansions.
"It depends how it is structured," Pishue said.
Eric Pearson, CEO of Kennewick-based Community First Bank, said while credit in the Tri-Cities hasn't tightened as much as in other parts of the state or the nation, he's seen reluctance by business owners to take on debt.
"Most business owners are worried about what tomorrow will bring," Pearson said. "I think in general business is looking at (credit) that way."
But some business owners are looking at cheap prices and seeing an opportunity to buy, which could mean taking out loans, he said.
Art Tackett, community and economic development manager for the Benton-Franklin Council of Governments, said staffers working in the council's small-business loan program tell business owners that sometimes using credit for a purchase makes sense.
"If you have $300,000 in the bank, don't go out and spend it all on a $300,000 machine because then you have no money," Tackett said. "We try to educate them there is a place for debt financing, and that they need to borrow wisely and not just borrow because it's available."
Pearson said one result of the recession is that credit likely won't be as available as it was through most of the 2000s. He said a credit market that was too loose for several years is to blame for the economic downturn.
"It is overabundant lending that cause this financial mess," he said. "There were too many dollars chasing too few projects. Projects that shouldn't have gotten done, got done."
That resulted in a glut of office buildings and homes that didn't sell, and the real estate market collapsed, he said.
Gary Ballew, Richland's economic development manager, said commercial construction has slowed locally in part because developers are having a hard time finding financing, and there was a surplus of office space on the market going into the recession, as well as a boom in retail development.
"It has been slow there as well," he said. "Usually if there is a surge that is followed by downtime."
Richland now is seeing interest from developers in building apartments as people have moved into the relatively recession-proof area, Ballew said.
Pearson said adequate funding sources exist to finance commercial loans in the Tri-Cities, although the government programs might help some banks who have struggling operations outside of the area.
"I think there are institutions that could surely use and need the program and put it to good use -- probably some in our backyard," he said. "An institution like ours wouldn't take advantage because we have access to funds without government involvement. But I think it is an interesting plan. I will be curious to see how it comes out."
-- Michelle Dupler: 360-753-0862; mdupler@tricityherald.com
