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IN BUSINESS SMALL BUSINESS Small Business Loans Harder To Get Than Ever By Dave Berns staff writer Steve Antill cashed out his IRA of about $7,000 to start his Strictly Iron fence-building business. The 34-year- old married father of two lost his job of 13 years and figured he would need to make it on his own. He estimates he grossed $40,000 during the past year building security and decorative fencing at 30 job sites. It's mainly a one-man operation with the occasional buddy brought on to help. Antill has also stretched himself, adopting the role of marketer, bookkeeper, parts supplier and website operator. "For years I wanted to start my own business. When you're getting that steady pay at a job, it's hard to leave," Antill said. "I could see why other people would be starting businesses in times like this." In this recession, banks have been hesitant to write small-business loans to help entrepreneurs get started. Potential borrowers have watched prospects decline as they failed to make regular payments on past debts, and their credit ratings tumbled. They are unable to qualify for traditional small-business loans. Many creative businesspeople have been forced to tap retirement and personal savings to build some form of economic security. Bankers argue that the money is there, but tighter, post-crash lending practices have made it difficult to lend because of an explosion in the number of high- risk borrowers. A growing percentage of small-business operators are using credit cards to purchase supplies and borrow money at interest rates that can exceed 30 percent. "It's nice to do it without any credit card debt," said Antill, who refused to tap credit cards to run his business. Like many trying to navigate the financial, regulatory and personal challenges of starting a small business, Antill has never talked to a banker in hopes of raising money for his venture. He's simply not familiar with the process. "I figured I wouldn't even qualify for a loan," he said. "I wouldn't even know how that works." At the height of the economic boom, 70 to 80 percent of all small-business loans in Southern Nevada tapped the collateral offered by the grossly 18 WITH LENDING DOWN, BUDDING ENTREPRENEURS ARE RELYING ON SAVINGS AND CREDIT CARDS TO GET THEIR ENTERPRISES OFF THE GROUND NERVES OF STEEL: Steve Antill, owner of Strictly Iron, started his business about a year ago aſter being laid off from an ornamental ironwork company. Antill says unemployment inspired him to do something he'd always dreamed of: Becoming his own boss. inflated value of the residential real estate market, according to UNLV's Small Business Development Center. Much of the startup money came from home-equity lines of credit. The dollars flowed freely in the days housing prices exploded and those become the piggy bank for new-business owners. "The first thing they would go to five years ago was equity in the home," Wells Fargo Nevada President Kirk Clausen said of the startups. But that entrepreneurial option no longer exists in a region where an estimated 75 percent of all home owners are underwater—they owe more on their homes than they're worth. The Small Business Administration spurred record levels of startups in the middle part of the decade, backing bank loans to as much as 85 percent of their principal, with banks issuing seed capital based on a borrower's available collateral, credit scores, the quality of a business plan, experience and the amount of cash, stocks, bonds and money-market funds a borrower possessed. Lenders at the time thought they could recover any losses by foreclosing on borrowers' homes if they failed to make payments in those days. Few were worried. After all, the value of that collateral rapidly escalated. SBA loans flowed. More than 1,200 SBA-backed loans worth $277 million were issued in Nevada during the 2007 budget year ended Sept. 30. That was up from about 370 loans worth $117 million in 2001. The money sparked the introduction of small landscaping companies, construction contractors, auto repair shops, professional offices—ventures that seemingly sprung up overnight in strip malls and office parks. And then the American economy collapsed. SBA-backed lending saw its number of Nevada loans fall last year to about 300 worth some $102 million. "It was easy to get loans in Vegas. It was easy money, but that day has come and gone," said Ed Cardena, SBA district director. "If you have good credit and a good business plan you can still get loans. The key to getting a loan is that you have to have good credit. The biggest problem is personal wealth has lost so much value that the collateral you can use for a small-business loan has decreased." Regional bankers are particularly sensitive to arguments that they took federal bailout money in 2008 as the financial markets began to melt down but failed to show thanks by lending to small- and midsized business operators. In fact, the numbers show that SBA-backed lending has somewhat rebounded in the region. Three | 29 AUGUST 2011 | STEVE MARCUS