SBA loan drop is a good sign for R.I.

On its face, a nearly 30 percent drop in the amount of capital pumped into the Rhode Island economy by U.S. Small Business Administration-supported and -related loans could be seen as a sign of a weakening business climate in the state. But that would be too simplistic a view. More

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PBN Editorial

SBA loan drop is a good sign for R.I.

Posted 11/11/13

On its face, a nearly 30 percent drop in the amount of capital pumped into the Rhode Island economy by U.S. Small Business Administration-supported and -related loans could be seen as a sign of a weakening business climate in the state. But that would be too simplistic a view.

Local bankers prefer to look at the entirety of the loans they have made to Ocean State businesses, and the picture there is much rosier. Bank after bank says that they have been growing their commercial-loan portfolio over the year, without the backstop of an SBA guarantee, something that is required because the borrower needs a little help to get the capital for operations or asset improvements.

Thus, a shrinking of the number and aggregate value of SBA-related loans in the face of more commercial loans overall means that more companies find themselves on firmer financial ground, able to take on debt to improve or expand their business. And that is a good thing. •

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