Small Business Lending Still in Decline

January 10, 2012

On December 28, 2011, the U.S. Small Business Administration’s (SBA) Office of Advocacy released their 2011 third quarter report on small-business lending. According to that report, outstanding small-business loans declined approximately $7.2 billion (or 1.2 percent) from June 2011 to September 2011 with the largest percentage declines in commercial real estate loans from lenders with $10 billion – $50 billion in total assets. The report goes on to state that the small business market actually saw a slight increase in loans offered by mega-lenders with the exception of commercial and industrial loans for which the demand remained weak.

Please click here to read the full report.

In October 2011, the Federal Reserve Bank of San Francisco (FRBSF) released its Economic Letter and suggested that small-business lending was still in decline but showed signs of stabilization. According to the FRBSF, from June 30, 2010 to June 30, 2011, outstanding small-business loans from banks fell at a rate of 5.5 percent. This is in comparison to the year before (June 30, 2009 to June 30, 2010) when bank portfolios of small-business loans fell at a rate of 6.4 percent. Even though small-business lending appears to be declining at a reduced rate, it is still falling. We’re not out of the woods yet.

Please click here to read the FRBSF letter.