A sign announces growth on the south end of Marion. Meijer is slated to open next year. J. Morehead/Chronicle-Tribune photo
Tighter lending standards at many of the nation's financial institutions will not ultimately stop businesses that want to come to Grant County, but in the meantime, expansion plans might slow as a result.
"The tough thing right now is getting finances," Mike Egan of Marion Land Development said. "Retailers can't get financing that easily right now."
Egan's company is planning The Renaissance, a mixed-use development near Interstate 69 and Ind. 18.
Construction crews still will break ground on the site in the spring, Egan said, but developers' ability to fill the vacant spaces there may be temporarily hindered.
He thinks the situation is forcing institutions to lend to only the most creditworthy borrowers.
"It makes you make the deal as good as it can possibly get," he said. "There's no margin for error. Everything has to be justified from a financial standpoint."
Scott McCarthy, vice president of retail development at Redico, the company planning University Marketplace at 38th Street and Western Avenue, said many potential retailers are now taking a wait-and-see approach.
"Every place is affected," he said. "All retailers are being cautious."
McCarthy said Redico isn't nervous about the situation because his company already has made a long-term commitment to developing its Marion property.
"Marion has had its share of tumbles, but it has tremendous opportunity," he said. "Obviously, we'd like to have it fill up quickly. But to do what we want, we have to be patient."
A good portion of Tim Eckerle's job involves convincing businesses to come to Grant County. The credit crunch won't stop a business that wants to be here, the executive director of the Grant County Economic Growth Council said. But it might make the process more deliberate.
"I assume everyone's been given reason to pause," Eckerle said. "It won't be as quick. There may still be a deal, but it won't be at the same pace."
In essence, a credit crunch means there is less money available for banks to loan to each other and, ultimately, to borrowers.
"New businesses will find it more difficult to get money to start up than it used to be," said Tom Lehman, a professor of economics at Indiana Wesleyan University. "If you have money to lend, you're skeptical to lend it, especially to other lending institutions, because you don't know what collateral is behind it."
Local bankers say their core business isn't greatly affected by what's happening nationally.
"I don't see that it has hit banks in Grant County at this point in time," said Ed Merchant, community bank president of Regions, 402 S. Washington St. "We haven't had any bank in Grant County that's freezing it's lending that I'm aware of. Where it may be different is credit standards."
Certain types of loans banks were chasing three to six months ago, such as loans to commercial home builders, aren't as attractive anymore, Merchant said. But the market for loans for many things, including autos, mortgages or businesses, shouldn't be dramatically altered.
"Large New York banks have loaned out more than they have in deposits," he said. "Smaller banks in smaller areas like Marion, Ind., have more deposits than loans. I don't think a lot will change around here."
Local banks haven't necessarily tightened their lending standards, said Jim Widner, senior vice president and regional manager for MutualBank, 100 W. Third St.
"We're attempting to look more closely at loan applications," Widner said. "The more marginal borrower may not be able to access credit as easily as in the past. But we still have money to lend."
Egan said developers can expect challenges, but he also thinks those challenges will not be a long-term problem. He believes the need for more businesses in Marion, especially retailers and restaurants, will ultimately draw investments to the area regardless of the national economic climate.
"Marion hasn't had so much for so long," he said. "There's such a big void there. Once it's realized there's not a lot of competition, it makes it easier to invest."
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