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PLUNGE IN SBA LENDING ALARMS SINK

Florida's CFO is questioning big banks over a plunge in loans to the state's small businesses.

Florida Chief Financial Officer Alex Sink, a former state president of Bank of America, is railing against big banks operating in Florida - companies like her former employer.

Her concern: Many big banks are still refusing to make small-business loans in Florida, putting a damper on the state's effort to recover from the biggest economic downturn since the Great Depression.

"Most disturbing to me, I heard a comment that some of the big banks were actually redlining Florida," Sink said Friday. "A good loan package would be sent up to a big bank for underwriting approval and the first question asked is, 'Where is the property located?' and when the response is Florida, there is almost an immediate 'No' answer."

Redlining refers to denying or limiting financial services to specific areas. The term has typically been used to describe a bank discriminating against an area because of its racial or economic makeup.

Whether the accusations are anecdotal or not, Sink said she plans to call top executives at out-of-state banks active in Florida next week to hear "from their mouths to my ears" that they are not redlining Florida.

North Carolina-based Bank of America in 2008 was among the biggest providers of Small Business Administration loans in Florida, where it ranks as the largest bank by deposits. In SBA's just-ended fiscal year, however, the megabank slashed by 95 percent the number of smaller, startup SBA loans in the South Florida district (which includes most of the Tampa Bay area). Bank of America reduced its number of bigger loans for capital purchases and land acquisitions by 43 percent throughout the district.

A Bank of America spokesman attributed the drop in loans to a mix of tighter underwriting, poor-quality applications during this recession and fewer healthy companies seeking loans.

In traveling the state, Sink said, the biggest complaint she hears from small-business owners is lack of access to credit.

Beyond the outreach to bank executives, Sink said she will ask Office of Financial Regulation Commissioner Tom Cardwell to monitor small-business lending activity and provide quarterly reports.

Sink's comments came during a conference call with reporters in which she urged support for the Obama administration's latest initiative this week to try to ease the credit crunch.

The White House proposed increasing the size of current SBA loans and making it easier for community banks to lend. Specifically, the administration suggests providing lower-cost capital to community banks that submit a plan to increase small business lending.

Sink said community banks are "at the heart of small-business lending," with 60 percent of their loan portfolios tied to such loans.

"In a state like Florida, we have more than 200 banks with assets less than $1 billion," Sink said. "I'm encouraged and hopeful that many of these banks will participate in these low-cost programs that are now going to be available."

Jeff Harrington can be reached at jharrington@sptimes.com or (727) 893-8242. Follow him on Twitter at twitter.com/jeffmharrington.

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