“Small Business Lending in the United States, 2012,” is a yearly review of the small business lending activities of depository lending institutions in the United States.
Published by The SBA Office of Advocacy, small businesses use this report to identify small business friendly lending institutions in their community, while banks use the information to analyze the competition in their market.
Small businesses tend to rely on traditional depository institutions for their credit needs.
Since the end of the recession in mid-2009, overall lending conditions have improved for businesses, but improvement has been slower for small firms. Nondepository
lenders such as credit unions, finance companies, and others have become increasingly important as suppliers of credit to small firms.
• Total small business borrowing from depository lenders remained subdued for both commercial real estate (CRE) and commercial and industrial (C&I) loans under $1 million, while large business borrowing increased. The value of these small business loans outstanding declined by 3.1 percent in 2012, compared with 7.0 percent the previous year, while large business loans in excess of $1 million increased by 12 percent in 2012, compared with 5.8 percent in 2011.
• In 2012, the value of micro business loans—the smallest business loans of less than $100,000—was $138.2 billion, compared with $139.5 billion in 2011, a decrease of roughly 1 percent; the decline was in commercial real estate loans.
• Lenders with total assets between $1 billion and $10 billion and those with assets between $100 million and $500 million combined accounted for 39.3 percent of all small business loans, and for more than half—53.3 percent—of the total decline in small business loans.
• Two ratios are used to gauge changes in lenders’ small business lending activity. The total assets ratio is the ratio of small business loans to total lender assets and the total business loan ratio is the ratio of small business loans to total business loans. Both were down in 2012—the total assets ratio by 4.3 percent and the total business loan ratio by 0.3 percent—showing that small business borrowers were less successful than large business borrowers in competing for business loans.
• The largest lenders, with $50 billion or more in assets, are active in the C&I micro business lending market, where they represent 68.7 percent of small business loans.
• CRA-reporting institutions made a total of 3.3 million small business loans valued at $178.8 billion in 2011.
“While overall small business lending continues to decline, we are not seeing the sharp decline we saw in recent years. 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,” said Dr. Winslow Sargeant, Chief Counsel for Advocacy.