By State Sen. Greg Goggans
One of the areas hardest hit by the current economic recession has been our state-chartered banks, especially when it comes to their lending ability. Georgia’s banks are only allowed to lend up to 15 percent of their total capital to any one borrower. In a poor economy their capital has declined, lowering their lending limits and creating a negative atmosphere for investment and business growth. Georgia’s current lending laws have had the unintended consequence of preventing banks from renewing loans, even with their best customers. This punishes banks by forcing them to turn away business and it hurts borrowers who are meeting their obligations. Those borrowers then must take costly time and resources to seek out additional credit in this slow market, many who rely on these loans just to stay afloat.
This current situation our banks are dealing with is simply not the way to stimulate economic recovery, help Georgians get back to work, and create the long-term growth our state desperately needs right now.
To immediately address this urgent need, the General Assembly passed House Bill 926, which was signed into law by Governor Perdue Thursday. This bill will lift some of the mandates state banks have been operating under, allowing more flexibility for them to renew loans with their good-standing borrowers. HB 926 brings Georgia’s single-borrower lending limits in line with federal guidelines, putting Georgia’s banks on an even playing field when it comes to competing for business around the nation.
It is also a big victory for consumers, small business, and investors alike, who can avoid the expensive cost of searching for additional capital. Good-standing customers, such as business owners and homeowners, have a much greater chance of having their current loans renewed. It also frees up banks to work with larger borrowers, such as real estate investors, so they can acquire the capital needed to infuse into the marketplace and grow their business. Most importantly, it will keep many doors in our state open for companies, retain jobs, and keep Georgia citizens doing business with Georgia banks.
In good times and bad times, the General Assembly’s top priority should be creating an environment around the state that supports economic growth, job creation, and free-market principles. HB 926 eases the flow of much-needed capital in a poor economy, which will be a catalyst for getting our economy back on track. This bill encourages businesses to seek new investment and pursue expansion opportunities. Legislation like this will be the most effective way to create jobs and get Georgians back to work.
Please remember to contact me in my office on the issues that are affecting you and your area. I am here to represent you and it is an honor for me to work on your behalf. As always, I’d like to thank members of the Senate staff, who contribute regularly to my column.
Sen. Greg Goggans represents the 7th Senate District, which includes Atkinson, Bacon, Berrien, Clinch, Coffee, Echols, Lanier, Pierce and Ware counties and a portion of Cook County.
PRESS RELEASE
For Immediate Release:
February 12, 2010
For Information Contact:
Matt Colvin, Broadcast Specialist
matthew.colvin@senate.ga.gov
404.656.0028