According to the Federal Deposit Insurance Corporation, at the end of March 2011 the records have shown a sum of $109 billion as the amount of loans that were outstanding to the small businesses. IT is an 8.6% drop from March 2010 to 2011. The company analyzed loans of less than $1 million. According to the Federal Reserve Bank of Kansas City, the Big banks’ outstanding loans to small businesses were dropped by 14% during the same period, while loans by smaller lenders fell by 3%.
According to the study conducted by Pepperdine University, business owners rank access to capital as the most important issue facing privately held companies. During the past six months, only 17% of the businesses having annual revenue less than $5 million who applied for loan actually got the loan. Coming to the large companies, about 37% of the respondents having annual revenue more than $25 million have successfully got the bank loans in the last six months.
Many of the respondents reported stronger loan demand from small firms in the first quarter of 2011. Majority of the loan recipients belong to the category of largest of independent businesses such as those with multiple revenue streams and ample loan collateral.
According to the Federal Reserve, commercial and industrial lending, which is an indicator of business-loan demand, has totaled to an amount of $1.26 trillion in May, which is up by 3% from the last year. But the March data given by FDIC shows that commercial and industrial loans of amount less than $1 million, which are issued to small firms, dropped 10% from a last year.
Thank you for sharing these small business loan stats. How long do you think it’ll take for the outstanding loan rate to drop?