LI businesses cautious of new lending rules

New rules designed to ease lending to small businesses won't have much effect if they have no reason to borrow, Long Island business owners said Friday.

Congress on Thursday approved a small-business lending bill sought by President Barack Obama that will make it easier for community banks to make Small Business Administration loans. The government now will guarantee 90 percent of the loan and waive application fees, making it more affordable for businesses to seek the loans and safer for banks to make them. The bill also created a $30-billion fund for such loans.

But some local business owners were skeptical that the moves would have much effect.

"This loan program makes funds available to these community banks; it doesn't say they have to lend it," said Lou Basso, president of Farmingdale-based Alcott Group, a human resources firm.

"If your business is in trouble, sometimes a loan is not going to make the difference. It may help some businesses. It doesn't get to the root of the problem - the economy has got to get better, sales have to get better."

Until business improves, many companies will be hesitant to borrow, said Scott Cooper, president of the Melville-based Scott Cooper Associates ad agency. "Unlike years ago, when people would just spend money, then the business would come, it's not like that because of the uncertainty" about the economy, he said.

But one local banker who makes small-business loans said the new rules will make an immediate difference.

"It makes it much more affordable for smaller- and middle-market customers," said Stuart Lubow, president and chief executive of Great Neck-based Community National Bank. "We're seeing demand, and we're seeing better-quality demand for these kind of loans. We've been very busy in that arena. This provides another arrow in our quiver."