Lending levels reflect ongoing uncertainty

The declining level of financing activity backed by the U.S. Small Business Administration in Mesa County reflects the ongoing uncertainty business owners face in running their ventures.

Even with fee waivers and increased guarantee levels, the dollar volume of SBA-backed loans fell in Mesa County during the 2010 fiscal year, which ended Sept. 30. The dollar volume of loans issued through the 7 (a) general business guarantee program inched up just a little more than 1 percent to nearly $5.9 million. But the dollar volume of loans issued through the 504 program to finance land, buildings and equipment dropped nearly 64 percent to just more than $2 million.

The fact that 30 SBA-backed loans worth a total of nearly $8 million were issued in Mesa County is far better than nothing,
of course. But the numbers also signal that business owners remain reluctant to borrow money even with good terms and historically low interest rates. That reluctance has a lot to do with the economy, to be sure, but also reflects uncertainty over what’s going to happen next.

Will the economy recover? How fast and to what extent? Will more people find jobs? Add to that the uncertainty over the election and who will be in charge in Denver and Washington, D.C.

Even taxes — long considered, along with death, a certainty — are uncertain. Any decision about the fate of Bush-era tax cuts set to expire at the end of this year likely won’t be made until after the election. By one estimate, more than a third of the revenue from a proposed increase in the top two federal income tax rates would come from business owners.

Recent changes in SBA lending programs to decrease costs and increase loan limits and guarantee levels undoubtedly offer small businesses greater access to capital. That’s a good thing. But until business owners feel more assured about the future of the economy and their own operations, many will remain hesitant to actually borrow that money.

There are some tantalizing signs of improvement in Mesa County, among them more activity in the energy sector, rising labor demand and the construction of several large retail operations. Additional service at the Grand Junction Regional Airport offers welcome news, too. Here’s hoping there’s soon more certainty about doing business.