Banks runs a small commercial gas line company in
To win the large and lucrative contracts, he needs to be able to tell those companies that he has the resources to cover his costs and get the job done, on time and better than his larger competitors.
"For me to have power in this industry, I have to be able to say to (utilities), 'Look, guys, you can give me that business,' " said Banks, founder of Banks Gas Services, which has about 60 employees. "I have a
Five years ago, getting financial backing from banks was a bigger hassle, requiring documents going back several years to get approved, he said. More recently, the required documents had to go back only six months, he said, an example of how access to credit has loosened up lately for some small-business owners.
Recent surveys have shown that financial institutions are cracking open the door for companies that were virtually locked out during the recession.
The floodgates are not opening to prerecession levels, researchers said. But lenders are beginning to offer an easier pathway for small business financing, said
"More small businesses have the ability to get loans," Stibel said. "First and foremost, loans are available. And, second we see the credit amount being higher, we see the terms being longer, and we see the criteria being more flexible."
Last month, Banks was approved for a
"It has lightened up somewhat," he said. "What's different this time around, we're so much more established, and I think they're in a much more giving mood."
If small businesses are finding it easier to get loans, it's not just because banks are feeling more generous.
Many small businesses have shored up their finances since the recession, making them more creditworthy, said
"In a lot of cases, businesses, their fundamentals are looking better," Geraci said. "They've gone back to basics, learned to live a little bit more within their means, and that's set them up in a better position to borrow."
Small business loan applications at PNC are actually down slightly from last year, Geraci said, perhaps because small firms have more options. But banks that hoarded money during the recession and are now looking for places to invest are beginning to jump back into the small business market.
"As all banks are looking to grow their loan book now, it's definitely more competitive than it has been in the last couple of years," he said.
Regulators are watching closely to ensure that the easing of credit doesn't translate to taking some of the risks that led to the recession. And bank officials interviewed for this story denied that standards had been relaxed.
"Nothing has really changed as far as the underwriting standards," said
Despite these gestures, credit markets remain tight, said
"It's getting a little bit better. We're seeing a little more access, a little more borrowing, but it's only creeping back to normal levels," he said. "It's nothing to look at, Wow, this is really good."
That banks are dipping toes in the small business credit pool rather than diving right in is a good sign that the lessons of the recession have stuck, said Stibel, of
"Good. Fantastic. Great," he said. "When you think about it, what was happening five or 10 years ago, that's not healthy either."
Banks said he has access to the credit he needs. The boom in shale drilling has helped make his business more attractive to creditors, which has helped him win larger contracts. The jobs he takes to upgrade gas lines for utilities can take months to complete. Therefore, he goes for long stretches without getting paid, and a large line of credit helps him cover expenses in the meantime.
His larger competitors may not have the same cash-flow concerns.
"In order to play with the big boys, I have to have something to back me up," he said. "And PNC is that something."
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