Large Lenders Dominate the Small Business Market
There is more proof that lending to small businesses is starting to recover in some loan size categories even in the midst of a continued decline of activity by financial institutions.
The SBA’s Office of Advocacy’s latest edition of "Small Business Lending in the United States" tracked data over the 2009-2010 period. The study found that small business lending dropped by 6.2%, less than the 8.9% drop experienced in large firm lending over the period looked at. As the gross domestic product has turned upward, business lending may follow the pattern of other recessions, in which commercial and industrial lending grew only after recovery was well under way, the SBA said.
Commercial and industrial loans of $250,000 to $1 million dropped by $12.0 billion–nearly 90% of the total decline in C&I loans. The largest percentage decline was in CRE loans of $100,000 or less, down more than 16%. The decline was partially offset by an increase of 2% in C&I loans of $100,000 or less.
The study relies on two types of data based on reports made by depository institutions to their respective regulating agencies–Call Reports for June 2010 and Community Reinvestment Act reports for 2009. Analysis from both show that while performance measures of small business lending from depository institutions continued to trend downward in 2010, the share of loans held by the largest lenders remained fairly constant.