Small business lending improving

Small businesses should find it easier to get credit this year, thanks to an improving economy and government programs aimed at encouraging lending.

This brighter forecast is clouded, however, by continued weakness in real estate — the collateral many small business owners use. Additionally, there is uncertainty about how many community banks will tap the U.S. Treasury Department’s new $30-billion Small Business Lending Fund.

The Small Business Administration’s flagship 7(a) lending program, meanwhile, could run out of money by Sept. 30, after a record $9 billion in loans to small businesses in the most recent quarter.

At a Federal Deposit Insurance Corp. forum, FDIC Chairwoman Sheila Bair and Federal Reserve Board Chairman Ben Bernanke predicted 2011 will be a better year for small business lending.

“It is starting to turn,” Bair said, adding, however, that many small businesses still complain they can’t get loans.

“We’re not quite out of the woods yet,” she said.

As the economy grows, sales at small businesses should pick up, which will make firms more creditworthy and increase loan demand, Bair said.

She said the FDIC wants to hear from small businesses that feel they have been unfairly rejected for a loan.

The FDIC has established a toll-free hot line, 855-334-2249, for small businesses to use in reporting credit problems.