PhillyDeals: Amid economic uncertainty, small businesses reluctant to borrow

U.S. senators led by George LeMieux (R., Fla.) and Mary Landrieu (D., La.) are backing a plan to make $30 billion available to small U.S. banks as a reserve to enable them to make billions more in loans to small businesses.

"Almost half of small businesses say their top obstacle is gaining access to capital," Landrieu spokesman Richard Carbo told me, citing data from the National Federation of Independent Businesses.

The Independent Community Bankers of America, a small-bank lobby group, has led support for the bill. The Senate is expected to vote on LeMieux's amendment later this week.

Do bankers really need this money - and will they lend it?

"Most bankers are trying to find good loans to make. [But] we see a slowing in loan demand," Gerard Cuddy, chief executive of Philadelphia's Beneficial Bank, told me.

Beneficial expects to lend more in the second half of the year, thanks mostly to customers who have left bigger out-of-town banks. But nationally, "I don't think $30 billion is large enough to make a difference," Cuddy said.

"Given their experience with the TARP (Troubled Asset Relief Program) program, I think a lot of banks are going to hesitate" to take the money, said H. Wayne Griest, chief executive of Continental Bank in Plymouth Meeting.

He says banks were eager to take the TARP money offered by President Bush's administration, but those that could rushed to pay it back after Congress attached strings, such as limits on executive pay.

Griest says he's seeing "a little bit of pickup" this year by business borrowers, the ones who cut costs and paid down their debt, if they could afford it, after the economy froze in 2008.

But he sees no rush by small businesses to take out new or bigger loans: "Until there's some clear economic signs that we're headed for a more sustainable recovery, they're reluctant to make that expansion or add those employees."

Teva Pharmaceutical Industries, based in Israel with its U.S. headquarters in North Wales, Montgomery County, is best known as a maker of cheap generic drugs that compete with, or are licensed by, brand-name drugmakers.

But now the shoe is on the other foot: Teva's stock price hit a 2010 low in Israeli trading Monday after one of Teva's own brand-name best-sellers - Copaxone, which fights multiple sclerosis - came under competitive threat from rival generic manufacturers. The Food and Drug Administration last week approved generic versions of a similar product.

After the banking bill passed the Senate earlier this month, among the many lobbyists who celebrated their pushing of projects into the legislation was John Prendergast, who grew up in Berwyn, graduated from Archbishop Carroll High School, and spent time at Temple and Penn before launching a 25-year career as an Africa activist. He cuts a familiar figure in Washington, Hollywood, on college campuses, and in foreign capitals.

In an e-mail to members of his George Soros-backed activist network EnoughProject.org, Prendergast thanked the group's supporters for successfully pressing Sens. Christopher Dodd (D. Conn.), Sam Brownback (R., Kan.) and others to add a section on "Conflict Minerals."

This section, Prendergast noted, "will require companies to disclose whether they source conflict minerals from Congo or neighboring countries, and require companies to report on steps taken to exclude conflict sources from their supply chains, backed by independent audits." The Securities and Exchange Commission has until next spring to issue reporting rules.

Conflict minerals, like the "blood diamonds" of war-torn West Africa in the 1990s, are the metals used in cell phones and other electronics that Prendergast says are dug from ground controlled by the region's militias, enabling them to fund conflicts where many of the dead, maimed, and uprooted are civilians. He says it will be easier now to pressure Sony, Apple, and other big companies to stop indirectly financing Africa's wars.