A thaw in small business lending is coming, according to some of America’s top economic, business, and political leaders—including U.S. Chamber Chairman Tom Bell. On January 13, 2011, Bell participated in a panel discussion, Overcoming Obstacles to Small Business Lending, jointly sponsored by CNBC and the FDIC. Federal Reserve Chairman Ben Bernanke, FDIC Chairman Sheila Bair, and Sen. Mark Warner (D-VA), were the other panelists.

Bernanke referred to a “virtuous cycle” that will start as the economy continues to strengthen. As small businesses increase sales—and cash flow—they will become more creditworthy, and banks will be more willing to offer them loans. Bernanke projected that the economy will grow by 3% to 4% in 2011.

Bell and the other panelists offered the following suggestions for facilitating increased small business lending:

Remove uncertainty. A “regulatory tsunami”—including the Dodd-Frank financial regulatory reform law—has had an adverse impact on economic growth and lending, according to Bell. With more than 300 rulemakings required by the legislation, banks are unsure what the rules of the road will be and as a result are withholding loans. Sen. Warner, however, rose to the defense of Dodd-Frank, arguing that while imperfect, the legislation struck a good balance and would help to level the playing field between community banks and larger lenders. Warner also explained that because members of Congress have limited expertise in technical financial matters, it made sense to delegate rulemaking to the regulators. Bell also suggested that a permanent extension of 2001 and 2003 tax relief—especially for small businesses—would go a long way in creating greater certainty.

Send clearer signals from government. Sen. Warner suggested that the government has been sending mixed signals to banks. On one hand, regulators are encouraging banks to strengthen their balance sheets. On the other hand, government leaders are encouraging banks to continue lending. Bair stated that regulators need to strike the right balance and that banks must become less risk averse and more willing to do the due diligence necessary to completely understand a loan application.

Expand business opportunities for small business. Congressional ratification of pending free trade agreements with Colombia, Panama, and South Korea will increase opportunities and cash flow for small business exporters, thus making them more attractive loan recipients, according to Bell.

Shore up the real estate market. The panelists discussed the challenge arising from a still-weak housing market. Because property is often used as collateral against loans, the decline in property values over the last few years has made banks more wary of lending. Bell suggested that the “huge loan loss in real estate has not been addressed,” and that government officials must find a way to stimulate a secondary market.