Decoding themes across small business lending reports

Jessica SarterSmall Business Lending

A consistent point of debate in the small business lending industry over the past three years has been related to the amount of credit available to smaller firms. While some reports show that such lending has increased, others continue to imply borrowers have not been able to reach adequate financing for their businesses’ needs.

When seeking out financing, a small business owner needs to know all of the possible avenues to obtain it, and which will yield the best results. The loan application process is often much more successful when the borrower is well-informed on matters in the industry, so decoding these reports – and their discrepancies – is imperative.

The first symmetry can be seen across the reports of several reliable sources, and that regards the types of lenders that are decreasing credit approvals, and those increasing output.

Smaller, regional banks have stepped up efforts to reach small businesses in recent quarters. Earlier this month, Businessweek reported that, in 2011, bigger banks started providing a smaller share of total small business loans than they had before the recession. Additionally, DailyFinance reported earlier this week that the larger U.S. banks have decreased lending by 5 percent in 2012, while regional banks have increased disbursement by just under 10 percent.

This month, the Small Business Administration Office of Advocacy released its most recent Small Business Lending Research Summary for 2011. The report showed that megabanks, or those institutions with $50 billion or more in net worth, were responsible for more than half of the decrease in overall small business lending last year.

The evidence here points to smaller, regional banks as being consistent providers of financing to small businesses. Another consistent point in recent reports has been that micro loans – those valued at $100,000 or lower – have been among the biggest drivers of small business lending this year.

In the SBA Office of Advocacy Quarterly Lending Bulletin, data revealed that commercial and industrial (C&I) micro loans were the only category to experience growth in the first quarter of this year. Overall, however, the small business lending industry outlook has been dismal in recent months, as several reports have cited difficult conditions for acquiring financing.

Another consistent trend has been in the franchise financing industry, where many small business owners have found success when searching for adequate lending. The most recent IFA/BoeFly Franchise Lending Index revealed that loan disbursement in the sector increased by just under 6 percent between May and June of this year. Additionally, several programs are in place to assist potential franchisees in getting the financing they need.

Businesses should consider using a loan-matching firm like BoeFly for their financing needs. No matter the type of loan you need or small business you run, BoeFly can ensure the most efficient and effective loan application process, as you will only need to make one submission to reach thousands of potential lenders.

Further, BoeFly’s proven algorithms ensure that the lender you are matched with best suits your specific needs and business specifications.

Though the economy has been tough and reports show that lending is down across the board, many organizations have stepped up efforts to increase support of small business owners. This includes the SBA, which recently proposed less-stringent size standards for its loan programs, as well as many financial institutions and advocacy groups that offer guidance related to financing and general small business operations.