“I was a little bit worried” about being able to get financing, said Kristin Jakiel, a school teacher who drives about 50 miles to work every day and wanted to trade in her 2009 Chevy Cobalt that was approaching the end of the 70,000 mile warranty. The loan processor “had me approved by the next day. We made the decision to buy the car on Wednesday, and we had a new car on Saturday.”
Cars and light trucks sold at a 15.3 million annualized rate in February, exceeding the median estimate of economists surveyed by Bloomberg. Automakers led by General Motors Co. and Ford Motor Co. predict demand for cars and trucks, on pace for the best year since 2007, will remain resilient.
“It’s starting to happen,” said Bill Hampel, chief economist for the Credit Union National Association in Washington. “There are people who want to lend, and people who want to borrow. It’s been getting stronger in the past six months or so. It just takes time to get away from the level of fear we saw during the crisis.”
The thawing in financing is also playing a role in lifting the index of leading economic indicators. The gauge of the economic outlook for the next three to six months got a 0.14 percentage-point boost from its credit component in January, matching the second-highest gain since 2004, according to data from the Conference Board, a New York-based research group.
The credit component is comprised of six measures that assess changes in liquidity, stress in the financial system and the risk appetite or willingness of lenders.
“We’re slowly seeing credit availability expand,” said Kathy Bostjancic, director of macroeconomic analysis for the Conference Board. “As borrowing increases, economic activity increases, and that creates more jobs.”
Ken Greene, 52, will hire 50 to 75 workers by mid-year for three bakeries he’s opening in Rochester, New York, after securing a $9 million, seven-year loan at a rate that was 5 percentage points lower than his previous financing, he said. Earlier, he had to refinance a commercial loan on a yearly basis since 2008, when the financial crisis struck.
“Banks were so skittish before, but with the economy improving it worked out,” said Greene, who employs about 500 people across 33 Bruegger’s Bagels locations in Albany, Syracuse and Rochester. “When people spend more, it translates into more sales and improves the ability to borrow and create more jobs.”
Deborah Olsen, who with husband Gregg Olsen, 60, operates 35 Miracle Ear hearing aid stores, is diversifying as credit becomes more accessible. A 10-year, $498,800 loan is going toward her first Massage Envy clinic in Anchorage, Alaska. She has hired 15 workers and plans to double that this year.
“I’m so excited,” said Olsen, 55, adding that about 50 customers have already made appointments ahead of the March 16 opening, thanks to a sign on the storefront and advertising on Facebook, the social-media website. “The loan has certainly made things easier.”