SBA Report Reveals Small Business Lending Trends

Business lending is key to both growth and survival.

SBA Report Reveals Small Business Lending Trends

SBA Report Reveals Small Business Lending Trends

Business lending is key to both growth and survival.

Author: Dan Brecher|July 30, 2012

Business lending is key to both growth and survival. However, as many New York and New Jersey businesses are aware, small business financing is often hard to come by in the current economy.

A recent study by the Small Business Administration reveals that overall lending and borrowing by financial depository institutions and small businesses was weaker in 2011 than in the previous year. The results confirm that both borrowers and lenders are awaiting further recovery of the economy.

The study examined two types of data reported by depository institutions to their regulatory agencies—The Call Report data and the Community Reinvestment Act (CRA) Reports. The results include cooperative banks as well as savings banks, savings and loan associations, and commercial banks.

Below are a few key findings highlighted in the SBA lending report:

  • While business borrowing by large corporations is rebounding, small business borrowing under $1 million remained restrained. Small business loans outstanding in June 2011 were valued at $606.9 billion, a decrease of 6.9 percent from $652.2 billion the previous year.
  • Borrowing declined for both types of small business loans—commercial real estate (CRE) and commercial and industrial (C&I) loans under $1 million—but at a slower rate for CRE. The value of the smallest C&I business loans or micro loans (less than $100,000) declined by 12.7 percent, from $137.2 billion in June 2010 to $119.8 billion in June 2011. CRE and C&I micro loans combined were valued at $139.5 billion in 2011.
  • Banks with $50 billion or more in assets (often referred to as megabanks) accounted for 38 percent of small business loans outstanding and for 51 percent of the total decline in small business loans.
  • The number of multi-billion-dollar lenders with assets over $10 billion was down from 94 in June 2010 to 92 in June 2011. Their share of total assets, however, grew from 76.7 percent to 77.3 percent during the same period.
  • The CRA data on small business lending are in line with the results in the Call Report data. In 2010, 774 CRA-reporting institutions extended 4.3 million loans of less than $1 million, for a total of $178.8 billion in small business loans; this compares with a 2009 total of 6.2 million loans valued at $205.7 billion made by 799 depository lending institutions.

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About Author Dan Brecher

Dan Brecher

Dan Brecher's experience ranges from general counsel of New York Stock Exchange and NASD/FINRA member brokerage firms to representation of companies in hundreds of public and private securities offerings and advising institutional and high net worth investors.

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