The end of the year has brought a sharp decline in lending to small businesses. Only $2.75 million was loaned in January to businesses in the Buffalo and Rochester areas of New York compared to the previous quarter’s average of $18.6 million and 95 loans a month. Although that is a 71 percent drop, the number of loans in effect are higher than a year ago. Both the increase in loans in the past year and the decline in the new year are tied to government incentive programs that waived fees for borrowers and guaranteed payment for lenders. The programs were part of the the economic stimulus and recovery efforts to introduce liquidity into the business lending market. The numbers demonstrate that it succeeded, but there is a question whether the momentum will continue in the absence of the programs. Similar events are being played out in business communities across the nation.
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