The Small Business Jobs Act of 2010 made $30 billion available annually for commercial lending over a three-year period.

The Small Business Jobs Act of 2010 made $30 billion available annually for commercial lending over a three-year period.

The money is available to qualified borrowers from certified lenders, said U.S. Sen. Ron Wyden, D-Ore., who was in Medford Wednesday championing the act.

"The bankers told me this morning they are awash in liquidity," Wyden told a gathering of business owners and entrepreneurs in the RCC/SOU Higher Education Center auditorium. "We've got to make sure the money is lent to Main Street."

There is no arguing the point, said People's Bank of Commerce President and Chief Executive Officer Ken Trautman.

"Every bank has a lot of money to loan, that's what's funding the national debt right now," Trautman said. "The problem is that it's hard to find a qualified borrower that fits regulators' criteria."

He said banks are hesitant to get federal certification to take part in the program, in which the government assumes 85 percent of the risk. The attached strings, which give the Treasury Department the ability to cancel bank contracts, are among the red-flag issues.

"There is such distrust in the banking community that nobody wants to sign up, because it sounds like TARP, where Congress can change things in midstream," Trautman said. "If you signed up, you were a bad bank. The bill is 360 pages long and I'm not sure how many legislators read the thing to know what went into it. It says right in the bill the Treasury can modify or cancel any contract that's been in place less than two years."

In other words, thanks, but no thanks, said Trautman, whose Biddle Road bank was the sixth largest Small Business Administration lender in the state last year.

When there are qualified lenders, however, the competition is fierce, he said. A refinance of a commercial warehouse attracted offers from five banks.

"We didn't win, but the borrower got a great deal," he said.

Conventional business loans require verifiable income with a 1.3-to-1 ratio, or $1.30 of income for every $1 of debt, Trautman said.

It requires historic numbers, and that's where most start-ups and new-product developers fall short.

"Almost everyone has had losses in '09 and '10," Trautman said. "As soon as we see a loss, they are no longer a conventional borrower. There are some businesses that have been around 30, 40 or 50 years and only in recent history have they had losses. You want to make them a loan, those are the frustrating ones."

The laws regulators are enforcing, he said, have been on the books for decades but weren't tightly enforced until the real estate collapse led to credit and liquidity crunches.

"We need to look at the rules and loosen up some of them and ask, how do we facilitate the borrower?" Trautman said.

The pleas raised by the two dozen small-business owners and a half-dozen more would-be owners echoed those Wyden has heard at town hall sessions.

The owner of fledgling Rogue Print Shop in Medford said he benefited from the presentation by the SBA, Rural Development branch of the U.S. Agriculture Department and the Oregon Business Development Department.

"The overall problem I've found is finding financing that's affordable and works within my time constraints," said Chris Wapniarski, who owns his own equipment, but wants to expand his company.

"It took a little bit of coercion to get the answer I wanted, but I had two bankers give me their cards," Wapniarski said.

"They have four concerns: Cash flow for supplies, rents and employees; management skills, strategies and abilities; equity in the business; and the business collateral.

"I came out of there thinking it opened doors and was a beneficial experience."

The balance between satisfying regulators' lending requirements and providing expansion capital for hungry entrepreneurs is a classic challenge, Wyden said.

"It's a chicken-and-egg thing. Do you have the confidence to start a business, and lenders have to be confident enough to loan to you."

Reach reporter Greg Stiles at 541-776-4463 or email business@mailtribune.com.