by Karen Kroll, Big Fat Finance Blog, January 20, 2012

Source: Wall Street Journal, Thursday July 21, 2011 by Robin Sidel & Aaron Lucchetti

From closing lackluster branches to moving employees to cheaper cities, U.S. banks and securities firms are intensifying efforts to cut costs as the sluggish economy, weak loan demand and new regulations eat into profits.

The Minneapolis bank reported a 57% jump in second-quarter profit and said noninterest expenses, which include labor costs, rose just 2% compared with a year earlier. U.S. Bancorp also is squeezing more revenue out of every dollar it spends to run the bank.

Signs of belt-tightening are just about everywhere as financial firms report second-quarter results. Cost cutting is rampant at big banks like Wells Fargo & Co., securities firms such as Goldman Sachs Group Inc. and small lenders like State Bancorp Inc., of Jericho, N.Y., with just 17 branches.

“The word today in banking, which is a word that bankers aren’t used to, is ‘productivity,’” said Ken Landis, a financial-services consultant at Deloitte.

The cost-cutting moves are a sign that executives are resigned to anemic loan demand, sluggish Wall Street trading volume and low interest rates. With few other places to turn for profit growth, many financial firms are trying to reassure investors and analysts that they are clamping down on expenses.

“We are going to continue each quarter to reduce our expenses and work hard at doing that,” Tim Sloan, Wells Fargo’s chief financial officer, told analysts Tuesday.

Wells Fargo, based in San Francisco and one of the nation’s largest consumer lenders, is aiming for a 12% cut in noninterest expenses, or $1.5 billion, by the end of next year. Much of that will come from a program called “Project Compass” that zeroes in on “removing unnecessary complexity and eliminating duplication,” Mr. Sloan said.

Even before earnings season, it looked like a slight rebound recently in total employment at U.S. banks and savings institutions was sputtering. They had 2.093 million employees as of March 31, compared with 2.087 million at the end of 2010, according to SNL Financial, a research firm that tracks the industry. That puts overall banking-industry employment just below 2004 levels.

Last summer, many bankers had hoped that the economy would gain enough momentum to increase demand for loans and other products. Instead, banks now say they are having a hard time finding credit-worthy borrowers. And it is getting harder to boost the bottom line through improved credit quality.

KeyCorp said Tuesday that it has made so much big progress with a cost-cutting program dubbed “Keyvolution” that the Cleveland-based regional bank has decided not to provide investors with future updates. The push is now “part of our normal operating rhythm,” KeyCorp CEO Beth Mooney said.

Bank of America Corp., the largest U.S. bank by assets, told analysts Tuesday that it expects to complete about half of its cost-cutting program soon. The Charlotte, N.C., bank hasn’t disclosed a specific cost-savings target, but it has been closing some branches.

As of June 30, Bank of America had 5,742 branches, down 158 from a year earlier.

On Wall Street, firms are starting to lay off employees and take other steps as a result of dismal trading activity and new rules that curb risk-taking.

Glenn Schorr, an analyst at Nomura Securities, estimates that Wall Street firms will cut expenses by reducing head count 3% to 4% from current levels.

“No one is going to come in with a big machete and cut 15%,” he said, because executives are concerned that they might cut too deep and miss out when conditions improve.

At Bank of New York Mellon Corp., expenses “are too high,” Chief Executive Robert Kelly said Tuesday. The bank said it likely will move more employees to cities such as Pittsburgh and Manchester, England, where costs are lower than the company’s New York headquarters.

BNY Mellon also wants to reduce the number of buildings it occupies and technology systems it uses. More details will be disclosed this fall. A spokesman declined to comment on whether layoffs will be part of the plan.

In June, Credit Suisse Group AG started laying off investment-banking employees as part of a belt-tightening that affected about 600 people. Barclays PLC last month eliminated 100 jobs in its investment bank. The latest cuts are on top of 600 layoffs in January.

Morgan Stanley, set to announce quarterly results Thursday, said last month that it might let its number of retail brokers slip below the previous range of 17,500 to 18,500. The Wall Street firm also is trying to cut $1 billion in annual costs within the next three years, partly by reducing the number of its legal entities and prodding employees to spend less when traveling.

The cost-cutting plan, announced in February, is run by the company’s chief operating officer and a group dubbed the “office of re-engineering.”

At Goldman Sachs, Chief Financial Officer David Viniar told analysts Tuesday that he hopes 1,000 planned job cuts at the securities firm aren’t just “a first swipe, because it is painful to do, and we don’t want to do this more than once.”

Source: The Wall Street Journal.com by Angus Loten

As the recovery sputters, bankers are expecting the credit crunch for smaller firms to get worse before getting any better.

Among 272 risk managers surveyed at banks nationwide in the second quarter, 60% said they expected approval rates for small-business credit and loan applications to stay flat or decline in the months ahead, Minneapolis-based credit-risk firm FICO reported Tuesday.

Over the same period, 73.8% said demand for credit from small business would likely rise, while only 46% said credit extended to these firms would increase, the survey found. Another 28.1% expected delinquency rates by small-business borrowers to ease, compared to 36.2% in the first quarter, while 33% percent expected the rates to rise.

By contrast, the outlook for consumer credit was more positive, with credit-card delinquencies and charge-offs at pre-recession levels, according to Andrew Jennings, FICO’s chief analytics officer. “Although some consumers continue to struggle with debt, credit usage is under control at an aggregate level,” Jennings said in a statement.

Tighter credit for smaller firms is “most likely in response to a perceived slowing of the economy, which would likely affect small businesses more so than larger organizations,” the report said.

Citing data from more than 1,000 small-business loan applications, Biz2Credit Tuesday reported that approval ratings for small-business loans by large banks dropped to 8.9% in June from 9.4% in May. Loans at smaller banks fell to 42.5% from 44%, the New York-based lending broker reported.

The declines were blamed on weaker revenue and lower profits.

While few people were paying attention, asset-based lending returned with a vengeance.

Most of the attention in leveraged loans these days has gone to the cash-flow crowd. With few exceptions, little has been written about asset-based lending. Yet buyout practitioners are now making full use of this decades-old corner of the capital markets.

Given the nature of its reliance on asset-intensive businesses, ABL tends to work best in industries chock full of accounts receivable and inventory. These include wholesalers, retailers, rental companies, oil and gas, automotive and durable goods manufacturers.

While ABL is known as “lender of last resort” for tougher credits, the current cycle has brought corporate heavyweights to the table like Georgia Gulf, Hertz, and Del Monte, as well as retailers like Sears, Neiman Marcus, Jo-Ann Stores, J Crew, and Liz Claiborne.

Many of these issuers that historically have obtained less rigorously monitored, or even unsecured, facilities, are finding ABL to be cheaper and more flexible. And they see lenders, whose assumptions about risk were sorely tested through the Crunch, be more accommodating today in structures backed by “hard” assets.

Similarly, private equity sponsors are rediscovering ABL as a way of maximizing the availability of less-expensive financing on accounts receivable and inventories, than using other forms of more junior (or less tightly governed) capital to complete the buyout.

For these reasons, conditions were ripe to produce all-time record volume last quarter for asset-based lenders. More than $27.5 billion of deals hit the market. And five of them –Hertz, Tesoro, Ashtead, RSC Equipment and Ryerson – were sized at $1 billion or more.

Just as the institutional loan market is in the midst of its own refinancing wave, ABL is no exception (see chart). Indeed, 82% of the 1Q deals were refinancings.

Timing of maturities is one reason. According to Thomson Reuters, there were 65 deals sized over $500 million that were originated between 2006 and 2008. As of the end of Q1, just under half of them have not yet been refinanced. Given the maturity of these deals most of them will need to be addressed within the next twelve months. Add to that the ABL financings that were done at higher spreads in the immediate post-Crunch period that will certainly be teed up for future mark-to-market repricings.

The Sears deal proves the point. That giant retailer has a long history in the ABL market, with the most recent venture in April 2009. Back then, the company tried to amend and extend its $4 billion RC. Only $2.4 billion extended, which was still the largest deal of the year in the asset-based market. The three-year transaction was priced two years ago at a lofty (for ABL) L+400 with a 1.75% floor.

This time around was a different story. The deal was upsized from $2.4 billion to $3.275 billion and priced at L+225 with no floor. And it got extended out five years.

Structure, Price & Sale The same sell-side-friendly behavior driving the institutional market these days is trickling into the hard-asset crowd. While ABL discipline hasn’t quite been jettisoned, it’s eroding at the margin, as we found speaking with top ABL players recently.

While they may be casual about cash flow, ABL lenders are fanatics about asset quality. Because they count on collecting 100% of their loans by liquidating accounts receivable and inventory, these providers swap leverage and coverage controls for rigorously monitored “eligibility” tests of current assets. It’s all about ensuring asset values hold up.

One measure of recent softening relates to “excess availability” under the borrowing base. This requires the client to keep a minimum cushion of eligible assets minus debt outstanding. Two years ago that number might have been 25-30%. Today it’s 10-15%.

Also shrinking are cushions below which a financial covenant might apply. If excess availability declines below a certain level, a fixed charge ratio might kick into an otherwise covenant-free structure. That level, once at 25%, is now 15%. This “springing” test has become a regular feature of upper-end (and a few mid-cap) ABL loans.

Other signs of watered-down ABL structures range from fundamental (extent and longevity of collateral over-advances) to administrative (frequency of inventory appraisals) to market-driven (allowance of sponsor dividends). Of course, much of this weakening is due, not to difficulties with the borrowers or the assets, but to aggressive lenders trying to stretch collateral for purposes other than supporting working capital.

One way arrangers are bridging that gap is to increase the advance rate on receivables, say from 85% to 100%. This over-advance can be governed by a higher fixed charge ratio in years two and three, bringing the borrower back into compliance down the road.

Another approach creates a term loan outside the typical borrowing base RC. Lenders are still secured by all the corporate assets, but the TL is allocated to the company’s enterprise value. That provides, for example, an additional half-turn of leverage which can also be “pulled back” via a higher fixed charge hurdle.

Dividends, de rigueur for cash flow deals, are increasingly seen in ABL land. For smaller deals, dividends are allowed as long as the borrower is in compliance with two tests, fixed charge and excess availability, after giving effect for the dividend.

All these trends undermine collateral value to some extent, driven by banks under pressure to book new loans, not watch existing ones go away. When a private equity sponsor wants to pay a dividend or make an acquisition under an ABL format, the house banks are compelled to tweak their structures to allow it, or risk losing the business.

Ironically, one hard-asset veteran tells us that the middle market is less disciplined than large caps when it comes to controls. “We’re finding a lot of less experienced lenders trying to marry a cash flow deal with an ABL deal, just by slapping ABL features on it.”

On face value, this is surely one possible explaination.  Could another contributing factor to the rise in the demand for asset based lenders be that traditional bank pockets are still tightly shut?  Any business that is struggling or growing rapidly will be in need of working capital.  Often, they turn to asset based loans as an alternative when the bank says, “no.”

Growth in credit line utilization and outstandings highlight First Quarter for reporting asset-based lenders

New York, NY (PRWEB) May 26, 2011

The Commercial Finance Association (CFA) today released its Quarterly Asset Based Lending Index for the First Quarter of 2011. The index, based on data provided by the Association’s 19 largest asset-based lenders, indicates that borrowers’ credit needs are increasing as the economy continues to improve.

Total committed credit lines in 1Q 2011 increased 0.8% compared to 4Q 2010, according to the data providing by responding lenders. Compared to 1Q 2010, total credit commitments were up by 1.2%. Credit line utilization increased to 36.9% in the quarter, an increase of .7% over the previous quarter and total outstandings grew by 5%. In addition, lenders’ new credit commitments originated in the first-quarter of 2011 were level with the prior quarter. However, 68% of lenders reported an increase in new credit commitments in the quarter.

“These numbers illustrate the continued steady improvement in the economy”, said CFA Chief Executive Officer Andrej Suskavcevic. “As U.S. businesses continue to emerge from the economic slowdown of the last few years, their needs for capital will continue to increase and asset-based lenders will continue to lead the way in providing critical working capital to American businesses of all types and sizes, added Suskavcevic.

Businesses in need of financing are encouraged to utilize the CFA’s free online service, “Find a Lender,” by visiting http://www.cfa.com.

The Quarterly Asset Based Lending Index also revealed significant improvements in portfolio performance among reporting lenders, with non-accruing loans as a total percentage of ABL outstandings declining by 42 basis points in the First Quarter. Forty-seven percent of lenders surveyed reported a decrease in non-accruals in the quarter. In another indication of improved portfolio quality, 84% of lenders reported either a decrease or the same level of net write-offs compared to the Fourth Quarter of 2010.

The Quarterly Asset-Based Lending Index was conducted by R.S. Carmichael & Co., an independent market research firm, to measure business growth, credit commitment, credit line utilization and portfolio performance of the 20 largest CFA members engaged in asset-based lending. The survey was commissioned by the Commercial Finance Association. For a full copy of the survey, please contact Brian Cove at (212) 792-9390 or bcove(at)cfa(dot)com.

About CFA
Founded in 1944, the Commercial Finance Association is the trade group of the asset-based financial services industry, with nearly 300 member organizations throughout the U.S., Canada and around the world. Members include the asset-based lending arms of domestic and foreign commercial banks, small and large independent finance companies, hedge funds, private equity firms, floor plan financing organizations, factoring organizations and financing subsidiaries of major industrial corporations

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Source: Orange County Register, May 5, 2011, by Jan Norman

Approximately 2.6% of small businesses have filed for bankruptcy some time in the past seven years, according to a new study for the Office of Advocacy in the U.S. Small Business Administration.

According to American Bankruptcy Institute data, more than 323,000 businesses filed for bankruptcy from 2004 through 2010, more than 39,000 of them in California. This state’s share of all U.S. business bankruptcies has increased from 12.4% in 2007 to 15.7% in 2010, an indication that the recession hit California businesses harder than their counterparts nationwide.

Small businesses can file for bankruptcy protection under Chapter 7 (liquidation), Chapter 11 or 13 (both reorganization) sections of federal bankruptcy law. According to the SBA’s study, which looked at more than 10 years of data and other research, about 70% of businesses that file under any of these sections either emerge as a reorganized business or liquidate and start a new business.

In that sense, bankruptcy does provide small businesses a new start that enables them to contribute again the the U.S. economy and job market, said Chief Counsel of Advocacy Winslow Sargeant.

However, businesses that have a past bankruptcy on their records have a 24% greater likelihood of being denied a loan than those that don’t. Plus, if they get a loan the interest rate will be more than one percentage point higher than lenders charge other businesses, the SBA study found.

“Our results suggest that owners of previously bankrupt firms are less likely to own credit cards and are more likely to look for outside financing from venture capitalists,” said the report written by Aparna Mathur,  a resident scholar at the American Enterprise Institute.

Despite those negative consequences from a bankruptcy filing in the past, the previously bankrupt firms are no more likely than other small businesses to be burdened with poor cash flow, high health insurance costs, excessive taxes.

“That these businesses were still surviving…is testament to the ‘fresh start’ principle (of the purpose of the bankruptcy laws),” the report said. “It suggests that the bankruptcy system goes a long way toward helping businesses recover and resume operations after a bankruptcy filing.”

The study was uncertain whether the data captured businesses that managed to avoid filing for bankruptcy by negotiating with creditors. “In the case of small-business loans, creditors may prefer to renegotiate the terms of repayment directly rather than have the firm file for bankruptcy,” the report said. “Creditors… have little control over the firm once the firm files for bankruptcy. This may make them more willing to renegotiate a loan.”

Source: Bloomburg Business News, by Karen E. Klein, April 18, 2011

Small business owners who declare personal or business bankruptcy face restricted access to credit and higher interest rates for years. But those who persist with a new or reorganized company can become just as large and profitable as counterparts who have never declared bankruptcy. That’s according to a new report released by the U.S.Small Business Administration, “Beyond Bankruptcy: Does the Bankruptcy Code Provide a Fresh Start to Entrepreneurs?” The research was done by Aparna Mathur, a resident scholar at the American Enterprise Institute, a conservative think tank based in Washington. Mathur, who specializes in economic research on small business, bankruptcy, and tax policy, spoke recently to Smart Answers columnist Karen E. Klein. Edited excerpts of their conversation follow.

Karen E. Klein: Why did you choose to study small companies that had declared bankruptcy?

Aparna Mathur: I had studied bankruptcy and small business as a PhD student. I realized that no one had studied entrepreneurs in a post-bankruptcy scenario. I wanted to know: How do companies that have gone through a bankruptcy compare with those who have not?

How did you do the research?

I used data from the National Survey of Small Business Finances, which was conducted by the Federal Reserve Board in 1993, 1998, and 2003. The survey only questions businesses that have fewer than 500 employees and it contains information about profitability, issues the business is facing, and demographic information about the owners.

The survey asks: Did you file for bankruptcy in the previous seven years? The data is not very precise because it doesn’t ask when they filed. But I found that between 2 percent and 2.8 percent of the businesses in each survey reported a prior bankruptcy.

So you compared those who hadn’t filed with those who had?

Yes, and I found that the bankruptcy system does somewhat of a good job of allowing businesses to come back after a prior bankruptcy. For instance, I did not see significant differences in the two groups on all the big things that concern small businesses: profitability, size of the business by employment, cash flow, health insurance costs, taxes.

The businesses that had filed for bankruptcy were just as large and just as profitable up to seven years later as those who hadn’t.

But they did suffer some negative consequences?

The ones that had a bankruptcy in their past were about 12 percent more likely to be denied a loan than those who had not filed for bankruptcy. Also, the interest rates they are charged were about 1 percent to 1.6 percent higher on all types of financing, including trade credit and credit cards.

The entrepreneurs who reported a bankruptcy were nearly 16 percent more likely to say they would not even apply for a loan, which suggests that we are creating a class of discouraged borrowers who think it is futile to go to the commercial loan market to get these loans, probably because they had been denied so often.

What did you conclude about that?

It makes you question whether the fresh start is achieving its objective fully. It seems these small companies are not recovering or getting back on their feet as fast as the bankruptcy system wants because the market response is to charge them more and be more risk-averse about lending to them.

And yet they seem to overcome those hurdles over time. How do they do it?

We don’t see long-term effects on profitability and firm size. So they might be overcoming it through nontraditional forms of financing. For instance, if they’re unable to access the loan market or they don’t have equity, venture capital firms might be more willing to fund them if they believe in them.

Serial entrepreneurship is a huge phenomenon in the U.S. Entrepreneurs start and fail and they start another business and they fail and they start again. Many of them do end up becoming entrepreneurs one way or another.

Where does this notion of bankruptcy as a “fresh start” originate?

Bankruptcy law facilitates the process of filing and allows individuals or companies that file to recover. For instance, most sole proprietors file for personal bankruptcy, which is Chapter 7. Many states provide generous exemptions so the entrepreneur’s assets are not used to pay off the business debts, including things like cars, jewelry, and other personal property. Other states like Florida and Texas have unlimited homestead exemptions. So even if you own a million-dollar home, it does not have to be used to pay the company debts.

Chapters 11 and 13 are structured around reorganization, so they allow you to come up with a repayment plan and continue with the business. And again, the amount of debt that can be discharged is substantial—similar to Chapter 7.

How does our system compare to other countries?

Places like Europe and Japan are much stricter when it comes to bankruptcy filing. For instance, in the U.S., bankruptcy is purely voluntary. An entrepreneur can decide to get out of a business if it’s not going well and they can file for bankruptcy, even if they have assets. In Europe, bankruptcy is more involuntary; it’s something imposed on you by your creditors.

There’s also much more stigma attached to bankruptcy there and the entrepreneurial climate is not as dynamic because people are more risk-averse. They know that if they fail, there’s little chance they could restart in business with the markets and the people turned against them.

So bankruptcy laws that are considered pro-debtor in many states actually have a positive effect on rates of entrepreneurship?

Yes. Of course, there are pros and cons. The benefit is that they encourage business entry. The costs show up in states with generous bankruptcy protections, where creditors tend to charge higher interest rates and credit is more restrictive in general.

Source:  smallbiztrends.com, April 8, 2011

Washington, D.C. (PRESS RELEASE – April 8, 2011) – Small businesses that have previously filed for bankruptcy are no more burdened than other small firms by poor cash flow, high health insurance costs, or excessive taxes, and they attain similar firm sizes, according to a study released by the U.S. Small Business Administration’s Office of Advocacy. However, they have about a 24 percent higher likelihood of being denied a loan and are charged interest rates at least 1 percent higher than other firms. The report finds that firms owned by African and Latino Americans are even more likely to be denied loans and charged higher interest rates.

“Small businesses filing for bankruptcy have an opportunity for a new start. This new start is hampered by the challenges of obtaining new loans. This can impede innovation and job creation,” said Chief Counsel for Advocacy Winslow Sargeant.

The study, Beyond Bankruptcy: Does the Bankruptcy Code Provide A Fresh Start to Entrepreneurs? by Aparna Mathur, finds that owners of 2.6 percent of firms have filed for bankruptcy at some point in the previous seven years. Credit rationing of previously bankrupt firms leads to a class of discouraged borrowers who are significantly less likely even to apply for a loan, according to the study.

The research relies on data from the National Survey of Small Business Finances as a basis for the analysis. Surveys were conducted by the Federal Reserve Board in 1993, 1998, and 2003.

About the Office of Advocacy, Small Business Administration

The Office of Advocacy of the U.S. Small Business Administration (SBA) is an independent voice for small business within the federal government.  The presidentially appointed Chief Counsel for Advocacy advances the views, concerns, and interests of small business before Congress, the White House, federal agencies, federal courts, and state policymakers.

Source: abfjournal.com, Thursday February 17, 2011

CFA: ABLs Play Key Role in Economic Turnaround for U.S. Businesses

The Commercial Finance Association released its Quarterly Asset-Based Lending Index, Q4 2010, which revealed dramatic growth in new credit commitments and showed significant improvement in portfolio performance, with non-accruing loans dropping sharply. The index revealed:

• New credit commitments among asset-based lenders increased by 13.2% in the fourth quarter
• Fifty-five percent of reporting asset-based lenders report an increase in new credit commitments
• Lenders’ non-accruing loans as a percentage of their total asset-based loans outstanding decreased 46 basis points in the fourth quarter, with 50% of lenders reporting a decrease in non-accruals
• Sixty percent of lenders reported either a decrease of the same level of net write-offs in the fourth quarter compared to the previous quarter

“The signs of increased economic activity we saw in the previous quarter clearly picked up steam as the year ended and the results of the fourth quarter ABL Index show that asset-based lenders are playing a critical role in providing the capital businesses need to meet their needs as the economy grows,” said Andrej Suskavcevic, CEO, Commercial Finance Association. “Asset-based lenders provided a life-line to borrowers during the recession and now will play an equally important role in helping those same businesses grow and prosper in the months and years ahead.”

The Quarterly Asset-Based Lending Index was conducted by R.S. Carmichael & Co., an independent market research firm, to measure business growth, credit commitment, credit line utilization and portfolio performance of the 20 largest CFA members engaged in asset based financing. The survey was commissioned by the Commercial Finance Association.

NEW YORK (CNNMoney) — The numbers back up what small business owners have been saying for two years: Main Street suffered a brutal credit crunch.

The total value of outstanding loans to small businesses plunged by $43 billion, or 6.2%, between June 2009 and June 2010, according to a report released this week by the Small Business Administration. That’s a drop of $59 billion, or 8.3%, from June 2008.

Measuring lending to small businesses is like trying to nail Jell-O to a wall, because every institution and government agency has its own definition of what constitutes a small business. For this week’s study, the SBA drew on data reported to the Federal Deposit Insurance Corp., which tracks lending by the banks it regulates. Both the SBA and FDIC assume that all commercial loans of $1 million or less went to a small business capital.

The drop-off in small business loans came against an overall backdrop of reduced lending. Lending to large businesses — measured by commercial loans of more than $1 million — dropped by $156.2 billion, or 8.9%, between 2009 and 2010.

Reduced demand played some role in the declines: As sales dried up through the recession, fewer businesses needed loans for expansion and capital investments.

But government watchdogs have been concerned that the credit clampdown went too far, cutting viable small businesses off from an essential financial resource. Larger businesses have access to other capital sources, like selling stock or courting outside investors. A typical small business, like your local dry cleaner, has one just option when it comes to getting a credit line: a bank.

“Small businesses are important to the national and local economy, but their existence depends on their ability to access credit,” the SBA said in its report.

The SBA’s own lending program, which doesn’t make direct loans but insures qualifying bank loans against default, also dwindled during the recession.

The number of loans backed by the agency’s flagship 7(a) program fell sharply from 2007 to 2008 and plunged again the following year. The total dollar value of the loans also plummeted, dropping 27% in 2009 to $9.3 billion.

A series of stimulus-funded SBA loan sweeteners that launched in early 2009 helped reverse the decline: SBA-backed lending rose in the 2010 fiscal year (which ended Sept. 30) to $12.6 billion, just shy of 2008′s total. Those stimulus efforts were discontinued on Dec. 31.

No easy way out: Policymakers have made a big show of studying the small business credit crunch. The Federal Reserve hosted a series of more than 40 meetings across the country last year with small businesses, financial institutions, trade groups and regulators.

Its conclusion? The problem is “complex and multifaceted.” That’s what Julie Stackhouse, a senior vice president with the Federal Reserve Bank of St. Louis, wrote in the Fed report summarizing the input from the meetings.

The Fed’s solution: America is going to have to brainstorm its way out of this one.

As an example of “an innovative effort to disperse credit,” the Fed cited a pilot program Sam’s Club launched last year to offer discounted SBA loans to its shoppers.

“The entrepreneurial spirit, which is indicative of most small businesspersons, is going to be critical for those entities to come up with solutions — whether private or public, for profit or nonprofit, or a consortium of parties working in concert — to provide credit,” Stackhouse wrote in the Fed report.

The government has launched some specific policy efforts aimed at relieving the small business lending crunch — but data from the SBA’s lending report suggests that those programs may miss the mark.

The Small Business Jobs Act, passed in September, authorized the creation of a $30 billion fund run by the Treasury Department that offers ultra-cheap capital to banks with less than $10 billion in assets. The idea is that pumping capital into small banks will get money in the hands of Main Street businesses.

But the SBA’s new lending report includes a fresh reminder that small banks play a small role in the overall lending market.

“The largest lenders — those with assets exceeding $10 billion — continued to dominate the small business loan market,” the SBA wrote.