By Ashley Fletcher Frampton
aframpton@scbiznews.com

The volatility roiling Wall Street has left some companies without access to cash, but many area bankers say credit is still flowing for small businesses.

Lending standards have not tightened for so-called Main Street firms, with the exception of those involved in real estate development, bank officials say.

However, data from the Federal Reserve suggest that a majority of banks across the county have tightened lending standards in recent months, even for small businesses.

Business as usual

Charleston-based First Federal is not making loans to speculative builders or developers of subdivisions because of the glut of homes already on the market, said Rick Baarcke, executive

vice president and chief lending officer. But otherwise, the bank’s underwriting standards for loans or lines of credit have not changed.

“General, run-of-the-mill commercial finance, it’s available,” Baarcke said, though he said there has been less demand for business loans in recent months.

Atlanta-based SunTrust bank is also wary of development loans because of the oversupply of housing in the Lowcountry and around the state, said Mark Lattanzio, SunTrust market president for the Charleston area. But lending for other businesses continues as usual. It’s the same story for BB&T bank, based in Winston-Salem, N.C.

“We didn’t have to tighten our standards because we already had a conservative approach to lending,” said Bob Denham, a spokesman for the bank.

Local Bank of America officials referred questions to corporate offices in Charlotte. Officials there did not discuss details about their lending practices.

“We evaluate individually on how we extend credit and continue to lend to credit-worthy customers,” Bank of America spokeswoman Nicole Nastacie said in an e-mail.

Denham of BB&T said there is a misperception that banks across the country are not lending money.

Lattanzio of SunTrust said the federal government’s plan for aiding large financial firms could boost mortgage lending locally by adding liquidity to secondary markets. But the bailout plan has less of a correlation to local business lending, he said, because not much has changed in that market.

Local experience, national trends

That’s not the way it feels to Scott Newitt, a partner in Firefly Vodka, based on Wadmalaw Island. The company, best known for its recent success with its Sweet Tea Vodka, has been trying to expand production to meet higher-than-expected demand.

Newitt said he tried this summer to get a line of credit to fund that expansion, and five or six banks would not lend him the money based on the company’s accounts receivable. Most wanted him to use his home as collateral, he said.

“We could get maybe 15% of what was required,” Newitt said. “I would say that banks are not lending like they did last year.”

Newitt said the banks’ hesitation could be that the company has not previously taken a loan and established a history with a bank. In the end, though, he sought an alternative to leveraging his home — he formed a joint venture with a New Orleans-based company to expand production.

A July report from the Federal Reserve suggests that even if banks across the country are still lending money to businesses, many have changed their standards in recent months.

According to the second-quarter survey of 52 senior loan officers, the most recent survey published, 65% of domestic banks had tightened lending standards on commercial and industrial loans to small businesses, or those with annual sales less than $50 million. In the prior quarter’s survey, conducted in April, 50% of banks said they had tightened small business lending standards.

Reasons for those tighter standards, according to the survey, were a less favorable or more uncertain economic outlook, reduced tolerance for risk and the worsening of industry-specific problems.

About 80% of domestic banks had tightened lending standards for commercial real estate loans, including construction and development.

Business-to-business credit

Even if local small businesses are not experiencing stricter rules on credit from their banks, they might see it from vendors and other firms they do business with.

Ted Dombrowski, who owns Ted’s Butcher Block in downtown Charleston, said suppliers offer less wiggle room than they once did. In the past, a bill due in 30 days could be paid in 45 days, in a crunch, he said.

“Now, it’s 30 days,” Dombrowski said.

Small, local businesses might grant one another some flexibility, even now, he said. But the bigger the firm, the tighter the standards, Dombrowski said.

No one wants to hear “the economy” as an excuse, he said.

Reach Ashley Fletcher Frampton at 843-849-3129.