We are starting to see business reports and the evening news proclaiming that the recession is starting to come to an end. We have seen and heard significant jawboning that banks are being encouraged to lend to small business. Treasury Secretary Geithner reported in December that the economy grew at 2.2% in the third quarter as compared to shrinkage of 6.4% in the first quarter of 2009. 

Geithner, appearing on NPR with host Michelle Norris said, "We're not going to have a second wave of financial crisis. We'll do what is necessary to prevent that. We cannot afford to let the country live again with a risk that we're going to have another series of events like we had last year. That's not something that's acceptable.

“The economy would still be shrinking, unemployment would be much higher than it is today if we did not do the tough things, the hard things, the politically unpopular things to save a financial system in free fall," Geithner said.

The recent successful first flight of the Boeing Dreamliner and revitalization of auto giants including GM and Ford should have a positive domino effect on the economies of their respective communities, small business suppliers, related sub-contractors and sales teams. New facilities will have to be opened and machinery acquired, as well as employees re-hired to meet new demands. There will be a greater call on banks to fund these acquisitions and provide working capital to revitalize stagnant and teetering businesses.

From ELFA SmartBrief December 23, 2009: President Barack Obama told leaders of community banks at a White House meeting that he will try to streamline regulations to help them boost lending to small businesses. Data from the Treasury Department show that few have jumped on government aid meant to spur small-business lending. "The key sticking points have been what they have been from the beginning: the statutory restrictions that Congress has put on the [Troubled Asset Relief Program] funds," said Paul Merski, chief economist of the Independent Community Bankers of America. "It's been very difficult to entice banks to engage in a small-business lending program that would have all of those strings attached." 

Julie Creswell of the NY Times writes in the December 27, 2009 business section, “While it is not yet official, many economists say the recession ended sometime during the summer.” 

Will the banks and lenders be there and make loans available to aid in the recovery? One would think that they should be. That was the thought that has been troubling me, a thought I’ve discussed with colleagues throughout our leasing industry. I have found opinions are mixed. 

A typical small business has been in operation for 15 years, family owned, steady business and a record of recovery from past recessions and business reversals. The company has been paying all lenders on borrowings for machinery and equipment acquired before the current economy went negative. Cash position is down as sales are off, with limited access to adequate short term borrowing options. After a record of many years of increasing sales and profits, sales are off in the past two years and results reflect losses and inadequate cash flow. Management has remained stable. Would this be a viable candidate for a loan or lease approval?

In part two, we’ll get some insider info as brokers take stock of the current lending climate.