Small Business Lending Stabilizing

Lending to small firms by U.S. financial institutions continued to decline, but began to stabilize in some loan size categories over the 2009-2010 period, according to a report from the Small Business Administration Office of the Advocacy.

The study finds that small business lending dropped by 6.2 percent, less than the 8.9 percent drop experienced in large firm lending over the 2009-2010 period. GDP has turned upward, and business lending may follow the pattern of other recessions, in which commercial and industrial lending grew only after recovery was well under way.

“Businesses and lenders continued to exercise caution in borrowing and lending through 2009-2010,” said Chief Counsel for Advocacy Winslow Sargeant.

“As the economy improves, this study, through its state-by-state display of lender performance, can help both small business borrowers and lending institutions see where small firms are beginning to find the capital they need.”

The study finds that lending in the smallest business loans under $100,000 began to stabilize in 2009-2010—the total was down by 1 percent, compared with a 5.5 percent drop in 2008-2009, and real estate loans accounted for the entire decline.