Amid crisis, N.H. economy looks sturdy

If Witmer Jones’ telephone is an indication of how the credit crisis has had an impact on New Hampshire businesses, the news is not so bad.

Jones runs the U.S. Small Business Administration’s New Hampshire office in Concord. His agency has set up a hotline to help small businesses weather the economic decline, and one of the services offered is looking for alternative forms of financing. But the phone is hardly ringing off the hook.

“We’ve actually had very few calls,” Jones said.

As the global financial crisis continues, nearly every day reveals a new twist to the sordid story, and money experts and economists worry about how deep into recession the country will go if banks continue to severely restrict lending.

The stock market, despite its wild fluctuations and historic drops in the last month, seems to take a backseat to a nationwide credit freeze.

Consumers are feeling the pinch now that it’s more difficult to get loans for cars, homes or tuition. But many businesses depend on consistent lines of credit to buy products and equipment and even make payroll.

“I am concerned personally about start-up companies that are in their first phase of growth,” Fred Kocher, president of the New Hampshire High Technology Council, said. “It’s probably going to be a death blow to some of the start-ups. They’re not going to be able to get the loans they need.”

Kocher said he’s also concerned about the growth of New Hampshire’s high-tech manufacturing sector. The industry has been in the process of recovering from the dot-com bust of 2001, but now that recovery has stalled, he said.

But at this point, worry seems to be more pervasive than hard evidence of a full-blown credit crisis in New Hampshire.

Bankers, business and economic experts, and local business owners, seem to agree that although lending standards have tightened in New Hampshire, credit is still flowing.

“The only thing I hear about the credit problems is on NPR, when the problem is somewhere else,” New Hampshire Banking Commissioner Peter Hildreth said.

That’s not to say some industries aren’t feeling the economic pinch.

Jones is concerned for fuel oil dealers, many of whom rely on lines of credit to get the oil they deliver to customers, and then are reimbursed when customers pay their bills.

“If they don’t get the credit, they’re not delivering oil to your home,” he said.

The construction industry has slumped, as fewer people have the equity in their homes to borrow against the mortgage for remodeling projects, and fewer people decide to sell their homes and build new ones.

“Everyone I talk to is saying we’ve got to ride this one out,” John Stabile, a well-known Nashua builder and founder of H.J. Stabile & Son, said. “We’ve ridden them out before.”

Stabile said he has noticed some changes in the behavior of the company’s lenders. Right now they’re “doubling their efforts” to safeguard loans with collateral, he said.

Peter Bonnette, president of P.M. MacKay Group, a construction and remodeling firm in Nashua, said his business has no trouble getting the credit it needs, due to a longstanding relationship with TD Banknorth. But the impact of the credit crisis is evident on the customer side, he said.

“It’s obvious the phone’s not ringing as much on potential new projects, especially on the residential side,” Bonnette said. “What we are seeing is those who are conservative, who were always conservative with their mortgages, are still doing projects.”

On the commercial side, business is pretty solid, Bonnette said.

Location, location, location

If there are signs of a credit crisis in New Hampshire, few are coming from the community banks that do commercial lending.

Joe Reilly, co-founder and chief executive of Bedford-based Centrix Bank, said he and his colleagues in the local banking industry have been relatively unaffected.

“Does that mean there are loans that we would look at today that we would not approve that we would have approved a few years ago? Probably,” Reilly said. “We are certainly very attentive, vigilant and concerned about what’s happening in our broader world.”

Federal Deposit Insurance Corp. statistics show that local banks are performing relatively well financially compared to their larger counterparts. Hildreth, the state’s banking commissioner, said presidents of New Hampshire banks say they’re still writing record numbers of commercial loans.

“The problem is, I can’t speak for the groups that deal with national banks,” Hildreth said.

Michael Vlacich, director of the New Hampshire Division of Economic Development, predicts companies that do a lot of overseas business will fare better. However, he is also mindful of the U.S. credit crisis’ spillover into international markets.

But New Hampshire is lucky to have a diversified economy, with many sectors that thrive, Vlacich said. That way if one industry suffers, the fundamentals of the overall economy can still remain strong.

“It’s a very nerve-racking time for a lot of businesses,” Vlacich said. “There’s a lot of concern about whether $700 billion was the right deal.”