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Lending to Small Business Shrinks $1B

on January 20, 2010 Source: Policy Dialogue on Entrepreneurship

Last Friday (Jan. 15), the Treasury Department released a report finding major banks have cut small business lending by $1 billion in November 2009.

This marks the seventh straight month of decline in small business lending. The banks' total lending dropped 4.6% in that seven-month period. Since April, the 22 banks that received the majority of government aid have slashed their small business lending balances by $12.5 billion. In that period, lending to small businesses amounted to $256.8 billion.

Analysts suggest that these banks are conservative with respect to small business lending for two reasons: small businesses are risky borrowers, and fewer entrepreneurs are looking to borrow on the backdrop of slower sales.

Category:  General 

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