Entrepreneurial

Marc Bernstein’s response to reports of loan facilitators advising small business clients to avoid big banks: “It’s simply bad information.”

The head of Wells Fargo’s small business lending initiatives then pointed to the $3.7 billion the country’s fourth-largest bank (by total assets) lent to small firms over the first three months of the year – an increase of 27 percent over the first quarter of 2010.

“That’s not small change,” said Bernstein, who added Wells Fargo is the largest national lender of loans under $100,000 and was recently honored as the Small Business Administration’s (SBA) 2011 Large 7(a) Lender of the Year. “We are trying to do everything we can to get people who apply for a loan approved, but the fact of the matter is that there are a lot of small businesses that unfortunately have been hit very badly by the downturn and are struggling and it’s hard to see how they’re going to handle more debt.”

This appears to be the view of most big banks, who insist they are ready to lend, so long as the business owner can show they are capable of repaying the loan.

But what if your primary source of collateral – your house – has plummeted in value due to the housing slump that still has a grip on the country?

Small business owners are showing increased confidence in the economic recovery, but they’re still not willing to pull the trigger on hiring new workers, according to a new survey by Citibank.

“Optimism is definitely up,” said Raj Seshadri, who heads Citi’s small business banking division. “We’re not out of the woods. They’re worried about costs, particularly the cost of healthcare, the cost of raw materials – how they’re going to manage through the increasing cost of running their business.”

The majority of owners said they believe 2011 will be better (44 percent) or the same (42 percent) than 2010, while just 15 percent expect it to be worse, according to the poll. It included a random sample of 1,002 small businesses throughout the country with revenue in excess of $100,000.