Oct. 6--Editors note: Second in a series on the current financial meltdown.

Amid the financial crisis engulfing Wall Street, how tough is it for business owners to get loans these days? It depends on whom you ask.

Local lenders and some business advocates say funds are still available and deals are being done, but business executives and economists paint a far more pessimistic picture. Meanwhile, there are widespread national reports that dwindling credit availability has made short-term loans harder for companies to obtain.

Some of the country's largest financial institutions -- Lehman Brothers, Merrill Lynch, Wachovia and others -- have suffered losses of billions of dollars and face bankruptcy, bailouts or other dire fates.

But even against that backdrop, Connecticut-based banks are faring well and have money to lend businesses, said John Howland, president and chief operating officer of New Havenbased Bank of Southern Connecticut.

"The small banks generally have money to lend right now. We haven't been affected by this," Howland said. "A lot of the smaller banks have been completely under the radar screen."

Unlike their larger national counterparts, state-based banks have avoided the turmoil plaguing Wall Street, he said, largely because they did not enter the subprime lending business.

"I hope people will start to see the smaller banks are actually very secure alternatives," he said.

The Bank of Southern Connecticut has not changed its lending standards in response to the recent Wall Street crisis, he said.

Neither has Hamden-based Quinnipiac Bank & Trust Co. Like other community banks, the company, which opened in March, is well-positioned and has a strong portfolio, said President and Chief Executive Officer Mark Candido and Executive Vice President and Chief Lending Officer Richard Barredo.

"We are in very good shape," Barredo said. "We are extremely liquid. The community banks are in kind of an envious position."

In addition to steering clear of subprime loans, many community banks -- unlike larger institutions -- have very limited, if any, ties to Freddie Mac and Fannie Mae, he said. Quinnipiac Bank & Trust has no investments tied to the struggling mortgage giants, he said.

Local banks are confident they will continue to have money to invest in companies, said Anthony Rescigno, president of the Greater New Haven Chamber of Commerce. "Bankers are telling me they have money to lend and they're out there making deals," he said.

Valerie Carlson, spokeswoman for Bridgeport-based People's United Bank, echoed that sentiment. "People's United is very highly capitalized and we have a very strong balance sheet with $2.5 billion in excess capital," she said. "That provides us with ample resources for lending to commercial and consumer customers."

Others, however, are less optimistic.

Connecticut executives paint a bleak picture of the credit market and don't expect conditions to improve anytime soon, according to a Connecticut Business & Industry Association survey released last week.

The survey's Credit Availability Index, which gauges business owners' perception of current conditions, garnered a reading of 27 -- a reading of more than 50 indicates a positive view, while a reading less than 50 indicates deterioration. The survey's Future Expectations Index, which assess sentiment about the next three to six months, posted an even weaker reading of 12.

Business owners seeking loans can expect to encounter "increased difficulty in credit availability, credit terms and the amount of financing that's given" in the coming months, said Pete Gioia, vice president and economist at CBIA. "All the banks, even the ones in good shape, are really taking a good, hard look at their own exposure. It's not really business as usual."

Economist Donald Klepper-Smith of New Haven-based DataCore Partners LLC said that even though Connecticut banks are well-prepared to deal with the nation's credit crunch, they are not immune to the financial woes sweeping the country.

"Banks are clearly becoming more cautious," he said. "The days of easy money, I think, have pretty much fallen by the wayside."

Roger Joyce, vice president of The Bilco Co., a West Havenbased manufacturer, said that when it comes to business loans for capital expenditures, "I don't think there's any question that activity has been impeded."

So far, though, businesses seem to still have access to loans that help them cover supply costs, payroll expenses and other operating costs, Joyce said. However, if the current economic situation worsens, and the credit supply shrinks as a result, it could have detrimental -- and immediate -- effects on companies, he said.

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