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Good thing so much venture capital is around these days, because banks still hate lending to startups. That's confirmed by the latest Phoenix
Lending Climate in America survey. Philadelphia-based Phoenix Management Services polls commercial banks, finance companies, and factoring
companies each quarter.
Last quarter, startups held on to their second-place ranking in the "businesses you least want to lend to" category, with 60% of the 86 lenders
surveyed rating new companies as their least favorite clients. That percentage was down marginally from the fourth quarter of 1999, when 62% put
startups in that category.
What do lender dislike more than small biz? The health-care industry. It took the top slot for the fourth quarter in a row -- with 84% of the
lenders voting it their least favorite sector, little changed from the fourth quarter of 1999, when 85% ranked it worst.
The bad news for startups is that the small percentage of lenders that rate them as their favorite customers has shrunk substantially. In the
fourth quarter of last year, 13% said they like startups best. A quarter later, a mere 7% said so.
Why? You can tell these lenders are Old Economy folks at heart. Light manufacturing and industrial distribution rank tops, with 83% and 73%,
respectively, favoring them as loan clients. Heavy manufacturing came in fourth, with 45% of the vote.
New Economy entrepreneurs can find hope at the bank -- 72% voted service companies their favorite loan candidates, and 33% like technology
companies. Just let someone else take the risk to get them going.
By
Julia Lichtblau
in New York
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