Report examines lagging small business lending

A recently released National Small Business Administration (NSBA) Office of Advocacy report revealed small business lending has not recovered since the financial crisis.

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The report details how new small-business loans were cut in half during that time frame and have seen only a very limited recovery post-crisis, leaving small business loan originations down 40 percent from pre-crisis levels.

The report also references data showing modest recovery in the small-business loan market while total business loans have experienced a more robust recovery, led by the large -business loan market.

As a means of addressing the small business lending downward trend, the report urges action on several NSBA-supported regulatory and legislative steps to remedy the situation.

Officials are encouraging large banks to increase their small-business lending; support the formation of more community banks; promote the growth of non-bank lending options, such as credit-union loans – thereby increase business lending limits on credit unions; and limit the concentration of the banking sector.

The NSBA said the report used data from the Federal Financial Institution Examination Council to evaluate whether bank lending policies toward small businesses returned to pre-crisis levels after the years of 2009-2011.

The tests measured differences lending activity before, during and after the financial crisis.