Small business lending steady, with hopes for a spurt
Small business lending remains steady, with experts forecasting activity picking up in 2019.
Frank Gallo, senior commercial lender with Tropical Financial Credit Union, sees smooth sailing on lending volume compared to 2017, with not too many increases. He credits the status quo in 2018 to the uptick in interest rates since the start of the year.
“It hinders the ability for businesses to qualify for larger amounts of loans,” he said. “Just inherently that’s the nature of when interest rates increase. But, in the same breath, we are seeing more lenders in the market, more banks, more credit unions, more community banks becoming more active. It’s good for the small business because they have more options.”
Businesses are coming from all across the county to borrow funds, including downtown city centers and the suburbs such as Hialeah and West Miami. Professionals, including attorneys and doctors, are more prone to receive a greater variety of lending offers since they rank as lower risk applicants. Restaurants and similar businesses continue to get loans but have fewer lenders to access.
One trend hindering activity, said Mr. Gallo, regards the understanding of the tax reform that occurred months ago under the Trump administration.
“There has to be a clear understanding of the new tax reform that’s been happening for the last year or so,” Mr. Gallo said. “Small businesses need to understand that, and they need to be aware of the changing environment that’s happening now. In terms of government resources or initiatives or such, there has to be clear-cut rules and regulations pertaining to lenders that lend to small businesses.”
No matter the hiccup in tax reform clarity Mr. Gallo and others are predicting lending volumes to increase next year.
“I predict there to be a steady increase,” he said. “However, as interest rates are still predicted to increase, that’s going to hold the market at bay, if you will. It will keep businesses from borrowing too much but more so looking at the lenders that they are borrowing from.”
Professional Bank Executive Chairman Daniel R. Sheehan shares Mr. Gallo’s expectations. He writes by email, “Small business lending will continue to increase in Miami-Dade County and throughout the region as more people relocate to the area for various reasons – the weather and tax advantages being two of the primary drivers for relocating here.”
The relocation of more people will benefit small business owners, he said.
“As people keep relocating to Miami, the small businesses will continue to feel the positive impact that comes with an increased population. That will result in the need for increased resources for these small businesses,” Mr. Sheehan said. “Thus, the demand for such loans will rise.”