Lending to Small Business Shrinks $1B
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.