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Has Small Business Lending Gone Up or Down?

By Tanya Roth, Esq. on November 05, 2010 | Last updated on March 21, 2019

Is small business lending up or down? It varies based on who you ask.

Like everything else in business, it depends on which numbers you look at. For lending to businesses with less than $20 million a year in sales, you can look at the numbers for new loans, or the numbers for all loans; each paints a different picture. According to government numbers, lending is still down.

The full story of small business lending includes both points of reference, reports The Wall Street Journal. Banks are pointing to new or renewed loans on their balance sheets to show a rise in lending. Federal regulators, meanwhile, take a somewhat broader view, looking at all credit owed to a bank, regardless of whether it is new or old.

Even though lending has increased, according to the government, many banks are still not quite lending enough to compensate for the dropping "balance" of older debt.

The "balance" is the amount of credit owed to a bank, writes The Journal. The balance of most banks shrank during the credit and financial crises, as banks were slow to lend and outstanding debt was paid down.

The "balances" now appear to be headed in the right direction, though, even if they are not quite there.

"We want to grow our loans," Kathie Sowa, a lending executive at Bank of America Corp, told The Journal. "We're looking to make as many new loans as we can to grow our balances."

This effort by B of A to grow its balances is mirrored by other lenders as well. The Journal reports that J.P. Morgan Chase increased its small business lending (measured as sales of under $20 million a year) by 37%, as opposed to the same time one year ago. Likewise, B of A increased its lending to the same sized businesses to $13.9 billion, compared to $12.2 billion a year earlier. American Express has increased its credit lending as well. Yet for Citigroup, its overall balance is flat and for Wells Fargo, in the first quarter of the year, lending to small businesses was down by 22%. Lending has increased for Wells in the later quarters of this year.

So the question remains, has small business lending gone up or down? The answer seems to be just ... yes.

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