Small Business Lending Starts to Heat Up Again

Small business lending is on the rise, according to the Small Business Administration.

The chill in small business lending, frustrating many SMBs during the Great Recession, seems to be finally heating up.

Last week, the Small Business Administration Office of Advocacy released a study entitled, Small Business Lending in the United States, 2012. The report is an annual analysis of small business banking activities by lending institutions in the United States.

Businesses use these numbers to identify banks and other institutions in their community that are friendly to small business lending. Banks use the information to identify competition in their market.

“While overall small business lending continues to decline, we are not seeing the sharp decline we saw in recent years,” said Dr. Winslow Sargeant, Chief Counsel for Advocacy in a statement. “More importantly, the study shows an increase in the number of small business loans which underscores the positive turn in our country’s economic landscape,”

Overall findings from the study include:

The total number of small business loans increased from 21.3 million in June 2011 to 23.5 million in June 2012.
The overall outstanding small business loans continued to decline, but only by 3.1 percent this year as opposed to 6.9 percent last year.
While large business borrowing increased, total small businesses borrowing from depository lenders remained weak for both commercial real estate and commercial and industrial loans under $1 million.
However, C&I lending in amounts under $100,000 was up in both the number and size of loans for the first time since 2010.

Banks are reporting a significant rise in lending, especially 7(a) loans, which are the SBA’s most popular loan program. The report doesn’t take into account other promising funding options, such as crowdfunding (like Kickstarter) and nonprofits dedicated to microlending.

The SBA does say they are “keeping an eye” on these new forms of raising capital, as a potential factor for changes in the small business environment.