“We cannot direct the wind…….but we can adjust the sails” (author unknown). During the past 12 months, a number of banks and businesses have had to adjust their sails. There are those that argue that we are not yet in a recession and others argue that we are. Nonetheless, the majority of consumers are experiencing the effects of one. Financial institutions are repairing the damage from the economic downturn and are tightening their credit underwriting standards.

During the past 12 months the US credit markets have experienced a crisis we have not seen in many years. This crisis has been led by delinquencies and foreclosures in the subprime mortgage market resulting in commercial and investment bank losses that have far exceeded earlier estimates. A number of banks have experienced liquidity issues and have set aside billions of dollars to cover past due loans. These issues follow a period where credit expanded liberally and banks aggressively expanded portfolios of consumer and commercial real estate financing.

In addition, the energy crisis has compounded the problems of the US economy. The consumer has curtailed discretionary spending as more and more dollars have been diverted to cover the daily increase in the cost of gas, groceries and a number of other consumer goods and services.

As a result of a combination of all of the above issues, we have seen an increased number of layoffs and increases in unemployment throughout the country. Financial services, airlines, retail, real estate and construction are restructuring and downsizing. These steps are necessary in order to reduce overcapacity and improve competitiveness in our new global economy.

In the mist of all of this gloom and doom, there is hope. The hope lies in small, independently-owned and operated businesses that form the backbone of our economy. There are more than 26 million small businesses in this country, and 98 percent of them employ fewer than 50 employees. These businesses provide jobs for more than half the US work force and they generate almost half of our country’s GNP.

Over the past decade, small business created 80% of the net new jobs. Firms with fewer than 500 employees had a net gain of 1.86 million new jobs and large firms with 500 or more employees lost more jobs than they created. Not only are small businesses vital to our national economy, but they are also essential to the economic well-being of each and every community.

The Small Business Administration (SBA) was created by an Act of Congress in 1953. This Act was passed with the knowledge that the health of our national economy is based on the continued prosperity of small businesses. Neuse River Development Authority makes loans and underwrites and services SBA loans. We can provide details on our direct loan program as well as programs offered by the SBA.

The goal of the Neuse River Development Authority is to enhance economic development, create jobs and entice lending institutions to lend money to small businesses by providing subordinate long-term financing. We have seen a recent increase in the number of loan applications due to lenders desiring to share in the risk of new and expanding businesses.

The staff at Neuse River Development Authority is also available to make presentations to banks, civic clubs, public and private entities interested in educating their members and lenders on additional sources of funding. Please feel free to contact us whenever we may be of assistance in any way.