Even as small businesses in Rhode Island are seeing some sources of credit tighten, the state’s community banks say they have money to lend.

“We’re still out there and lending,” said Thomas W. Kelly, president of Bank Newport. “Our loans are up about 13 percent, year over year, since last year.”

Part of that has to do with a fundamental difference between small community banks and the larger investment banks that have rocked Wall Street this year, especially this week. The community banks are deposit banks, backed by the money that people put into their savings and checking accounts. Investment banks make, buy and sell loans without that stream of deposits coming in.

“We have the deposits. We have the liquidity to lend,” said Kelly. “We’re still doing what we always did.”

A spokesman for another local bank, BankRI, said this week that it similarly has money to lend.

Another reason Bank Newport hasn’t had to tighten its lending practices, according to Kelly, is that it already had fairly tight standards.

“We didn’t do any subprime lending,” he said. “We have a very strong loan portfolio.”

A measure of that, he said, is how that portfolio performs. Bank Newport’s level of past-due loans are about one-third of what is seen nationally, he said, adding that the bank has foreclosed on only one residential mortgage this year.

That points out another difference between community banks and investment banks. An investment bank’s worth is based on the value of its loans. If those are not performing, the bank is quick to foreclose and move on. But community banks make their money when customers pay back their loans, so the banks are more willing to work with borrowers who get into trouble.

“We don’t pull the plug very easily,” said Kelly. “It’s got to be something that’s intractable.”

While local community banks say they have money to lend, small businesses have seen credit start to tighten, according to Grafton H. “Cap” Willey IV, of the Providence office of Tofias PC, a regional accounting firm where he is a CPA and shareholder. He is also chairman of the Rhode Island Chapter of the Smaller Business Association of New England.

“They’re in a crisis mode,” Willey said. “It hasn’t exactly hit the wall yet.”

Businesses are seeing the effects of the national credit crisis seep into the Rhode Island economy, but they are not yet wide-spread locally.

“It’s happening on a one-on-one basis here,” he said. “Credit is tight, especially for new ventures. Credit is being tightened on existing loans.”

He predicted that will change after the first of the year. “Things are not going to be that rosy for businesses here.” He said local business will post lower profits — perhaps even losses. “That’s going to hit the credit departments at local banks.”

But Willey said he also has faith in small-business owners to chart a course through these turbid financial waters.

“I always look at small businesses being pretty creative and being able to bob and weave and make their way around it,” he said. “Historically it has been small business that led the way out of recession.”

pparker@projo.com