While the credit freeze seems a new thing to some, borrowing by local businesses has been slowing for a while. Ruben Garcia, district director of the U.S. Small Business Administration in San Diego, says in the federal fiscal year ended Sept. 30, his office counted 1,062 new local SBA loans, down 39.7 percent from 1,712 a year earlier. Dollar volume was $350 million, off 6.54 percent from the $374 million a year earlier. (Nationally, the number of SBA loans declined 30 percent, with dollars lent down 11 percent.) Several lenders, Garcia says, no longer lend to start-ups.

Overall, Garcia says San Diego’s banks are in good shape. “The banking community here is pretty sound,” he says. “The reason is most of the banks did not carry a lot of derivatives that the larger banks did.”

Garcia says his focus is keeping loans flowing. “The SBA continues to see small business as a top priority. We are working with the lenders and small businesses to understand the current situation.” For some businesses, the SBA can help secure temporary loan payment relief.

Congress recently gave Garcia a new tool, moving the ceiling on 504 loans used to purchase real estate and major equipment from $2 million to $3 million. With a 10 percent equity infusion by the borrower, the SBA and participating lender will guarantee 90 percent of the loan.

“We are here to help in this downturn,” Garcia says. “Money has been pumped in to creating new capital and we are hoping banks will resume lending and it will spur new jobs.”

Garcia expects more programs to emerge as the federal government prods the lending system out of its doldrums. In the meantime, he encourages small businesses to contact his office — (619) 727-4883 or sba.gov/ca/sandiego — for assistance. “We have 105 counselors that are in this office here along with the SCORE people,” he says. “It is free information with free help and counseling.”