Financing

Small Business Lending Shrank Again Last Year, Says SBA


Small Business Lending Shrank Again Last Year, Says SBA

Photograph by Steven Puetzer

Five years after the financial crisis and ensuing credit crunch, small businesses are still struggling to get bank loans, even as large companies are having an easier time borrowing. That’s the commonly told story, anyway, and one that’s borne out by research published (PDF) yesterday by the Small Business Administration’s Office of Advocacy.

To be clear, the agency doesn’t have data on the size of the companies doing the borrowing, but rather defines small business loans as those under $1 million. And because the study uses Federal Deposit Insurance Corp. data through June 2012, it doesn’t include the last year of lending activity. Still, there are a few key points from the SBA data (PDF):

• There was $588 billion in small business loans outstanding in June 2012, 3.1 percent less than at the end of 2011, and $1.9 trillion in large business loans outstanding at the end of last year, up 12 percent from the year before.

• Big banks are reputed to disdain making loans in small amounts, but they showed the smallest decline in small loans from 2011 to 2012. Small business loans from lenders with at least $50 billion in assets declined by less than 1 percent from a year earlier. Small business loans outstanding at all other banks shrank by 4.7 percent.

One explanation for big banks’ steadiness in small business loans is that credit card lending is included in the data. Indeed, the report ranked American Express (AXP) as the leading small business lender among institutions with more than $10 billion in assets. Criteria included total small business loans value and the percentage of total lending comprised by small loans.

There’s a lot more in the report, including state-by-state lending numbers, as well as some analysis of data from the Community Reinvestment Act. But the upshot is small business lending remained stagnant last year.

Clark is a reporter for Bloomberg Businessweek covering small business and entrepreneurship.

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