http://enews.earthlink.net/article/b...8-693e56c07826

NEW YORK (AP) — Since the credit crisis of 2008, everyone has been waiting for the banks to start lending money again. It's finally happening, but there's a catch: Businesses are afraid to spend it.

Bank loans to businesses grew 10 percent last year after dropping 19 percent in 2009 and 9 percent in 2010, according to the Federal Reserve. JPMorgan Chase, Bank of America and Wells Fargo confirmed the growth in their latest financial results.

But much of the loan growth comes from lines of credit, not traditional loans. And instead of tapping available credit to power up plants, open factories and hire people, businesses are waiting.

At the same time, they are hoarding cash. JPMorgan, the nation's largest bank, held a record $200 billion in business deposits at the end of last year, up 35 percent from the same time a year earlier. Wells Fargo and Bank of America also say deposits from middle-market businesses have soared.

"Our business customers are feeling optimistic," says Perry Pelos, head of commercial banking for Wells Fargo. "But I'm not seeing any boom yet because they are still a little uneasy about the future."

Even successful business owners have found it difficult to adopt the easy confidence of the years before the deep and bruising recession. They want to see more improvement in the economy before they take great risks again.
Analysts are watching bank loan growth closely because it provides clues about whether companies are preparing to hire. Unemployment remains high at 8.3 percent, though it has fallen from its recession peak of 10 percent.

Bank loans play a vital role in powering what economists call a virtuous cycle. Banks lend to companies, which spend to open factories to create widgets. Plants mean jobs, which leads to more money in people's pockets to spend. It re-energizes the economy.

Small and midsize businesses depend on bank loans to grow far more than large corporations, which can pay for their plans by selling bonds or stock in the financial markets.

In February, H.J. Heinz Co., the giant food company best known for its ketchup, raised $300 million by selling five-year bonds at an interest rate of just 1.5 percent. IBM, Procter & Gamble and McDonald's have all raised hundreds of millions of dollars recently by selling bonds and paying record-low interest rates.

Small and midsize businesses blamed banks for making matters worse when the recession struck by pulling back credit dramatically, and for not helping during the economic recovery by making credit freely available.