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Looser rules turn on faucet for loans for small businesses

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Bankers are showing small-business owners the money.


The Trump administration’s pro-business initiatives aimed at spurring economic growth, including easing lending regulations, appear to be having a positive, trickle-down effect for local markets.

As area banks loosen their purse strings, capital and loans for small-business growth and expansion are on the rise.

“We are hearing from our bankers that the tone … has been more flexible than it has been in the past,” said Ian McKendry, a spokesman at the American Bankers Association in Washington, D.C.

According to the association’s most recent numbers in 2016, about $9.6 billion in loans were made to finance farms and small businesses across Pennsylvania.

“We are experiencing a very vibrant economy, and I think the loan supply is a result in the reduction in taxes. There’s more money to loan,” Dave Lobach, chairman and CEO of Embassy Bank for the Lehigh Valley, said in reference to the Tax Cuts and Jobs Act.


If you own a small business, now could be an attractive time to apply for a loan.

Lobach said business is brisk for commercial and business loans across the region. He described the activity as an “upward spiral” which is helping small-business owners and operators to grow and add new jobs. He said businesses are experiencing growth and expansion.

“Right now there is a lot of loan demand,” Lobach said.

Embassy serves a core market of family owned and operated and middle market businesses with loans from $50,000 to $30 million or more, primarily in Lehigh and Northampton counties.

“Right now, we’re seeing a concentration of [loan amounts] in the $2 to $6 million range,” Lobach said.


McKendry said part of the shift from tighter to more easily accessible capital stems from government shifting oversight and management risks back to local banks.

“That gives banks the confidence to make more small-business loans, which have been picking up pace,” he said, adding the association expects the trend to be sustainable.

Lobach said “smart [government] regulation” keeps tabs on key market factors and promotes growth “in a smart, responsible way.”


Cobbling together financing to bring his vision for a public market to downtown Quakertown, Developer Chris LaBonge said he’s working with five lenders to raise capital for a public market in the borough’s downtown.

“One of the lenders is ready to go. Another I’m working with is asking for tenant agreements and other documents, and we don’t have those signed yet,” LaBonge said.

He said a third bank was “aggressively” courting him and had money to lend for the project.

LaBonge and business partner Ian Jeffrey are redeveloping four properties along East Broad Street and at the corner of Broad and Front streets in downtown Quakertown. The vision includes creating a marketplace and hip destination atmosphere.


Lobach said the banking industry took a hit during the downturn of a decade ago, tarnishing the image of bankers who were not in the business of making sub-prime real estate and housing loans.

During and after the crisis, laws such as the Troubled Asset Relief Program signed into law in 2008 by President George W. Bush, aimed to keep funds and credit flowing to businesses and consumers.

The Dodd-Frank Wall Street Reform and Consumer Protection Act followed. Dodd-Frank aimed to create a consumer watchdog and provide for more financial markets’ transparency.

“We didn’t make that our customers’ problem. We got the job done,” Lobach said of the 2008-09 industry shakeup.

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