Jeff Lashley has tried for more than a year for a loan to acquire a rival tractor-sales company.

Ron Channin, who leases retail space, has seen tenant deals fall through because prospects, even ones with solid concepts, can’t secure credit.

Small-business owners, supposedly part of the engine of America’s economy, continue to find it difficult to get the fuel—capital—to help get that motor started.

“It’s just tough and frustrating. It would be a dream to get a line of credit,” said Lashley, co-owner of Lashley Tractor Sales of Lithonia, Georgia.

They’re not alone.

Consumer spending climbed in the second quarter, as did residential investment, but “borrowing by businesses and households has remained weak,” Jon D. Greenlee, associate director of bank supervision and regulation for the Federal Reserve, said during a congressional subcommittee meeting November 2 at the Georgia state capitol.

Greenlee said Fed data suggest lending to consumers and nonfinancial businesses fell sharply in the third quarter.

“These declines reflect the fact that weak economic growth can both dampen demand for credit and lead to tighter credit-supply conditions,” he said.

The more than 27 million small businesses nationwide are responsible for nearly half of all private-sector jobs, Greenlee said, and these businesses carry about $1 trillion in debt.

Though low sales remain a top concern, tight credit is also a major concern for small businesses, according to a recent survey by the National Federation of Independent Business.

Federal programs, like enhancements to Small Business Administration loans, and nontraditional products have helped many businesses get capital, industry watchers say.

The reasons obtaining credit is difficult are myriad. Delinquencies in nearly all loan categories are soaring. Some companies simply aren’t demonstrating enough cash flow, and banks squeezed by a brutal economy and tougher regulation aren’t pulling the trigger if there is any reasonable doubt about a borrower’s ability to repay.

Other companies—such as those related to real estate—are in sectors where banks have already been told by regulators they have too much concentration of risk.

Banks themselves are storing away reserve capital to prepare for future losses.

“The middle market is just credit deprived,” said Tony Plath, finance professor at the University of North Carolina at Charlotte. “Anyone other than golden companies is having a heck of a time getting money.”

Bill Linginfelter, area president for Regions Bank, said standards have tightened, and banks need more detailed financial information than they did during the boom years. On the flip side, loan demand is also off as companies deleverage and pay down lines of credit.

“There’s just not the margin of error anymore,” Linginfelter said.

Collateral values and cash flow are down for many borrowers, but deals can and are being made.

Regions, like many other banks, is building more business relationships, opening business-checking accounts and moving away from a purely transactional banking model.

“The credit is there, the money to lend is there,” Linginfelter said.

Lashley had a loan in process with a startup bank awaiting its charter when that de novo lender learned it would not be allowed by regulators to open because of Georgia’s banking crisis. Lashley has since approached seven other banks for a loan to acquire a rival tractor-sales company in Griffin, Georgia. He’s gotten four refusals and hasn’t received an answer yet from the others.

Sales are off, led by a miserable January and February, Lashley admits. But the company has cut operating costs and diversified from heavy-duty equipment, the market for which has virtually frozen with the fallout of residential construction, into more consumer products.

Lashley took over the Griffin store, but can’t close on the building without a loan, he said.

“We’re paying $3,000 more in rent a month than the building note would be,” he said.