Fed: Competition pushing down banks? loan margin

Thursday, May 23, 2013

Minnesota- and Twin Cities-based banks are not making as much off their loans, the Federal Reserve Bank of Minneapolis reported Thursday.

But businesses with only a few million in annual revenue, a handful of employees and little collateral are still encountering tough underwriting, said Mike Ryan, director of the Twin Cities Small Business Development Center at the University of St. Thomas.

Ryan recalls it used to be easy before the Great Recession for a client to secure a loan to buy a business, even if there was little collateral. Now the down payments can reach as high as 30 percent. Ryan is presently working with a client spending about a $1 million on a business with good cash flow, but the client’s father-in-law was still needed to co-sign the loan.

“It’s still very difficult for small businesses to get loans,” Ryan said.

Originally published: 05/23/2013, Finance and Commerce