Small Business Lending on Rise, Study Shows

Large Banks Increase Share of Small Business Lending

Lending by the most important institutional supplier of credit to small firms--commercial banks--increased in 2002-2003, according to a report released by the Office of Advocacy of the U.S. Small Business Administration (SBA).

“Information about which banks are making small loans is critical to the health of small businesses,” said Dr. Chad Moutray, Chief Economist for the Office of Advocacy. “This kind of information helps small businesses save time and shop efficiently for credit—and it also helps the banking sector understand the competition in their markets.”

The report, Small Business and Micro Business Lending in the United States, for Data Years 2002-2003, includes lists of the top state lenders of loans under $1 million and $100,000, based on the Reports of Condition and Income (Call Report) and Community Reinvestment Act (CRA) data. Four sets of tables rank large Bank Holding Companies (BHC) and commercial banks nationally and by state. Findings also include:

• Small business loans outstanding (loans under $1 million) totaled $495 billion as of June 2003, an increase of $11.1 billion or 2.3 percent between June 2002 and June 2003, compared with an overall increase of 5.1 percent over the previous period, according to the Call Report data.
   
• In 2002, a total of $227.5 billion in small business loans under $1 million were extended by 905 CRA-reporting banks/BHCs, compared with $203 billion in 2001. Large multi-billion-dollar banks and BHCs made 5.3 million micro business loans valued at $73 billion in 2002, compared with $4.9 million loans valued at $62 billion in 2001.
   
• The CRA data confirm the findings in the Call Report data of the importance of multi-billion-dollar banks and BHCs in the market for the smallest loans.

The Office of Advocacy prepares an annual study of bank lending focusing on loans under $1 million (small business) and under $100,000 (micro business). This current study provides a brief review of bank lending activities in 2002-2003 based on two types of data reported by banks to their regulating agencies—the Call Reports for June 2003 and the CRA reports for 2002.

The Office of Advocacy, the “small business watchdog” of the government, examines the role and status of small business in the economy and independently represents the views of small business to federal agencies, Congress, and the President. It is the source for small business statistics presented in user-friendly formats and it funds research into small business issues. For a copy of the report, visit http://www.sba.gov/advo/research/lending.html.

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