Bank Lending to Small Businesses Declines

While lending to small businesses seemed to be improving last year, numbers from the first quarter of 2011 prove otherwise.

Falling 2.4 percent, the Small Business Administration’s Office of Advocacy found that small business lending totaled $609.4 billion over the first quarter this year, compared to $624.3 billion in December, according to a recent Wall Street Journal Blog.

After a sharp drop during the initial sting of the financial crisis, it appeared that bank lending was making a comeback in 2010. But recent data shows that loans under 100,000 have dropped 2.9 percent and loans up to $1 million have suffered a 2.2 percent decline this year.

Meanwhile, a recent study by Pepperdine University shows that banks approved fewer than half of all small business loan applications in the past six months. This signals a sharp divide between the demand for bank financing and its availability, highlighting the need for alternative capital solutions in the marketplace.

2017-06-08T11:42:15+00:00Capital Formation, Small Business|