U.S. banks tighter on business loans

WASHINGTON, July 28 (UPI) -- Tighter credit hasn't only affected U.S. consumers looking for a house but companies are also finding banks holding back, official reports show.

Banks have cut back almost 3 percent in the past year in lending commercial and industrial loans and 270-day "commercial paper" loans, generally used for inventory purchases or for working capital, the U.S. Federal Reserve Bank reported.

The decline from $3.36 trillion to $3.27 trillion is the largest annual decline in these loans since 2001, The New York Times reported Monday.

"Access to capital and credit is essential to growth. If that access is restrained or blocked, the economic system takes a hit," said Michael Darda, chief economist at MKM Partners in Greenwich, Conn.

The numbers are tangible for Drew Greenblatt, president of Marlin Steel Wire Products.

His company, which makes parts for appliances, is profitable and is expanding. But, when he asked Wachovia bank for a $300,000 loan to purchase a new factory robot, which would have added three jobs at his plant, he told the newspaper was turned down.

"The exact words were, 'We're saying 'no' to almost everybody,'" Greenblatt told the Times.