November 12, 2009: OCC Comptroller urged to get bailed-out banks lending to small businesses

As the credit crunch grows more dire for small businesses, the California Reinvestment Coalition on Tuesday brought together nonprofit community lenders, bank representatives and government officials, including Comptroller of the Currency John Dugan and Donna Gambrell, Director of the Community Development Financial Institutions Fund (CDFI Fund), to hear from local small businesses and discuss system-wide solutions to revive lending. 

In attendance also were: Barry Wides, Deputy Comptroller for Community Affairs for the Office of the Comptroller of the Currency (OCC); Mark Quinn, District Director for the Small Business Administration’s San Francisco District and representatives of the Federal Reserve and Federal Deposit Insurance Corporation.

“We have an opportunity here, with key elements of the US Treasury Department, to support community lenders and for banks to find ways to increase their small business lending,” said Alan Fisher, executive director of the California Reinvestment Coalition. “Unemployment is now the core problem of our economy, and small businesses are key to saving jobs. If we don’t improve the situation of small businesses, there will be no economic recovery for many neighborhoods and communities any time soon.”

Nationally, only 28 percent of small businesses are currently accessing bank loans, according to the National Small Business Association.

In California, the SBA made only 6,000 small business loans in 2009, down from 12,000 loans in 2008 and 15,000 loans in 2007.

Nonprofit community lenders from across California say they have tried to step into the gap, but called on banks to do their part in sharing risk and making long-term capital available so that financial intermediaries can meet community credit needs during this time.

“We need more lending, not less,” said Roberto Barragan, president of Valley Economic Development Center in Los Angeles. “Right now, banks have tightened their lending criteria and we have small businesses crashing and burning at a record rate.”

The OCC visit included a tour of small businesses in San Francisco’s Mission District, including Home Green Home, an eco-friendly, worker-owned cleaning service and La Cocina, a nonprofit commercial kitchen and incubator for startup food businesses.

Yvonne Hines, owner of Pralines by Yvonne, described starting her Southern-style dessert shop in the Bayview Hunters Point neighborhood based on recipes from her grandmother that led to catering jobs and grew into a thriving storefront. But with the recession, sales have dropped by half.

Speaking for many other small business owners trying to hang on during these times, Hines asked the bankers in attendance, “Where do I go, who do I go to get help to grow my business?”

For more information, contact Tram Nguyen at 415-864-3980; tnguyen@calreinvest.org.