Jill Jusko Many small- and medium-sized manufacturers are finding it difficult to obtain credit from long-standing bank lenders, making them unable to capitalize on the Federal Reserve's successive cuts to short-term interest rates. So suggests a survey of members of the National Association of Manufacturers, Washington, D.C., conducted in February. Among the findings:
For 34% of the survey respondents, credit is more difficult to obtain today than it was a year ago. And 16% said it was much more difficult.
47% of companies reported that the cost of borrowing has either stayed the same or increased, despite falling interest rates.
26% of companies said credit rationing has delayed their capital-spending plans. Additionally, survey respondents said banks cited three main reasons for frugal lending: a decline in company profitability, tougher credit standards and reduced lending overall to industry. "It is understandable that banks are being cautious about lending," says NAM President Jerry Jasinowski. "But on balance banks are overreacting and doing a disservice to long-standing business clients who have ample revenues, profits and an overall solid business footing."