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When the country’s largest banks announced their quarterly results earlier this month, a lot of them said they lent more money to businesses than they did in the first two years of the pandemic, when many small businesses were on the brink of government assistance.

Even as commercial lending begins to pick up, some small businesses are thinking twice about taking on more debt.

Banks have many incentives to lend money right now. For one thing, banks have a lot of deposits on their balance sheets, both from consumers who have accumulated savings and from businesses who have paid off their Paycheck Protection Program loans.

“It’s wonderful, but it’s waiting and the banks have to put that money to work,” said Chris Duncan, head of loans at La Salle State Bank in Illinois.

Another incentive to lend money is rising interest rates, which finally makes lending more profitable.

“We’d like to take advantage of rising interest rates to make loans that have a bit healthier margin for the bank,” Duncan said.

Duncan said the bank plans to get a bit more aggressive in marketing its loans. “We’ll try to get our products to people who need them, people who we think will benefit, and hopefully we’ll be lucky in terms of increasing loan volume.”

So far, he hasn’t had much luck. This is because many businesses don’t see the need to borrow money. Take Randy George, co-owner of Red Hen Baking Company in Vermont, which has some money from government relief programs.

“Most of it is gone, but we felt it was safe to keep a little cushion,” George said.

Instead of doing big projects that would require borrowing more money, George said he used the money to make small improvements. For example, he just bought a waffle maker to help him sell ice cream. He also recently purchased a tilting pan, equipment that allows him to cook larger quantities of soup.

“It’s thousands [of dollars], not hundreds of thousands,” George said. “It’s actually a powerful and very profitable investment.”

Above all, George is trying to make his business more efficient. His bakery and cafe still face supply chain issues, higher costs and labor shortages.

“We haven’t even returned to our pre-COVID hours of operation,” George said. “And that has a lot to do with the staff. You know, so we have to get back to using the facility that we have to its full potential.

While some business owners don’t need to borrow, others don’t.

“I wouldn’t even consider it,” said James Beck, owner of iBurn, a hot sauce store in Houston, Texas. Beck said he would consider taking out a loan if he wanted to expand the business. Right now, he thinks it’s just not the time.

“Why would I want to go into any kind of expansion, whatever it is, just to have who knows what kind of distraction, or health crisis, or international crisis?” says Beck.

Beck said he was focused on keeping his business alive. This month he moved the shop to a much smaller location in Houston. It also keeps fewer products on hand.

“Normally we would have larger stocks which would also allow us to wholesale,” Beck said. “But even the companies that were buying from us, wholesale, stopped.”

Beck said he hoped the downsizing would help him reduce his costs enough to make the company profitable again. He is also focused on expanding online sales before thinking about going into debt.

“When we can get to a point where we can see that OK next month or next year is either consistent or back to increasing revenue, then I’ll reconsider,” Beck said.

At this point, he says, there is no chance.

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