Las Vegas NowLocal Businesses Struggle to Get Loans

Local Businesses Struggle to Get Loans

President Barack Obama says America grows when small businesses grow, but banks are still hesitant to lend money and that means many small businesses are going under, laying off employees, or just barely holding on.

The Small Business Administration received $1.5 billion to encourage business loans, but progress is slow with everyone pointing fingers at the banks as the problem.

The financial system is basically in gridlock, according to financial experts. The part of the stimulus dedicated to the SBA is supposed to grow the backbone of the economy. One business found that backbone must be in the recovery room.

There's a daily ritual to deliver the mail to the post office boxes at the UPS Store in Henderson at Eastern and Horizon Ridge.

"It's pretty tight. When we put up the mail, it's Dave and I in the mail room everyday and we dance a lot," said employee Susan Keene.

So, Dave McGovern came up with a solution at the end of last year. The AT&T store next door moved and he wanted to seize the opportunity, "We basically want to double the size of the store."

So he leased the space next door and had plans drawn to expand from 1,200 square feet to 2,400 square feet, "This will be our postage meter, our fax machine. We will have adequate room for our color copier. Now it's squeezed into a corner."

Expansion would also mean hiring two more employees. McGovern just needed a small business loan to make the renovation and expansion. He walked into his bank in January with the plans. At first he was denied, and then offered the money at more than 12-percent interest, "Here's a project that should have been done in a matter of months or two months. Here it's dragging through the second month and we have not broken ground."

He's filled out a mountain of paperwork and has gotten almost nowhere. McGovern says his business actually grew during last year's increasing recession and he still cannot get a loan to expand, "I have maintained my good credit, the store has maintained its good credit. Maybe three or four years ago, I could have borrowed the money that I am looking for with nothing more than a signature."

These are very different times. The local Assistant Director for the SBA in Nevada says the stimulus should work. To encourage banks to lend, the agency will guarantee 90-percent of a small business bank loan, the banks just need to come to them.

From October 1, 2008 to March 23, 2009, more than $34 million in 130 small business loans have been guaranteed by the SBA. That's half the money in loans compared to the same period the year before.