ACQUIRING CAPITAL FOR GROWTH: MYTH VS. REALITY Part 2 Colorado Bankers Association 140 E. 19th Avenue, Suite 400 Denver, CO 80203 303-825-1575 www.ColoradoBankers.org
4 Forces on Lending (cont’d)• 4th layer impacting lending – DFA regulatory burden – 2,300 pages, 240 rules, 20,000 pages of regulations, 6.5 feet – 5,000 pages of proposed & final rules to date – 240 page executive summary – Lending is part art, part science – regulators look only at quantifiable – Banks forced to focus on internal process v customers’ needs – Bankers spend day accommodating regulatory orders, not accommodating customers & communities – “1.2 compliance officers for each lender” – compare to OSHA – Exam bill in Congress (external appeal) – Perlmutter amortization bill passed House in 2010 – Coffman & Perlmutter now with several concepts
Let’s Talk Small BusinessCBA’s Small Business Lending Initiative Unique Local success National acclaim Model
Let’s Talk Small Business CBA’s Small Business Lending Initiative• Goal: lend money, create jobs, help economy – Help get credit to small business even if the bank isn’t the lender – Maximize conditions for borrowers to get the loan approved• www.smallbizlending.org – Prep & support small business borrowers – smart borrower – Resources for small businesses – Information & options for lenders – Advice & Resources • Links • FAQs • Fact sheets • Loan diagram • Lender matrix • Calendar • Sign-up for updates… – Advice: dont give up; ask why “no” answer; learn from “no” answers
Let’s Talk Small Business Bankers have been called nasty names for years Example out of many: by small-business owners who have been denied credit, but the Colorado Bankers Association has launched an effort that could change that. Huffington Post Through aThe SchwabBlog website, smallbizlending.org, Colorado bankersA small-business blog that covers health care, politics, economic development and more. are beginning to refer customers who dontThursday, March 29, 2012 qualify for their loans to other organizationsColorado bankers answer call for small- around the state that might find a way for thebusiness access to capital cash-strapped owner to find capital he or she needs to grow. Ive been covering small business in Colorado for more than 20 years, and this effort is the first Ive seen between agencies of government and large commercial banks to solve the "access to capital" problem that is a perennial complaint of small-business owners who dont qualify for bank loans. If you try it, it might actually work.
Ongoing Challenges Examples• State Legislature & ballot initiatives – Public-owned banks • State owned bank • Local government owned banks • “Make loans banks won’t make, but not take any risk” – Foreclosure • Killed several bad bills in Legislature; now Constitutional Amendment• DFA Risk Retention – effectively require 20% down on home mortgages – bad consequences
Path to Recovery - Lenders• Funds available for lending• Great desire to lend – no profit from money in vault• Economic problems improving• Overcoming regulatory obstacles• Bankers anecdotally report resurgence – growing customer confidence• Borrowers’ market – banks compete fiercely for “A” loans
Thank You Colorado Bankers Association One Sherman Place 140 East 19th Avenue, #400 Colorado Bankers Association Denver, CO 80203 Government Relations team: Phone: 303-825-1575 CBA Don Childears Fax: 303-825-1585 Jenifer Wallerwww.coloradobankers.org Caroline Joy www.financialinfo.org Colorado Legislative Services Melanie Layton (consumer information) Jim Cole Garin Vorthmann Hogan & Hartson Craig Umbaugh Other partners