The nose dive that plagued small-business lending during and after the recession has finally leveled off, according to a new report from the U.S. Small Business Administration’s Office of Advocacy.
Small-business loans had been growing steadily and hit $711.5 billion in 2008 before tumbling into a five-year decline.
American banks reported $587.8 billion in outstanding business loans of $1 million or less in June 2012, showing a $19 billion drop since the previous year, according to the new SBA report. Lending in 2012 fell short of pre-recessions levels by $124 billion. It needs to increase by 17.4 percent before it makes a full recovery.
“While overall small-business lending continues to decline, we are not seeing the sharp decline we saw in recent years or the extreme decline we saw in 2008,” said Winslow Sargeant, chief counsel for the SBA’s advocacy office. “More importantly, the study shows an increase in the number of small business loans, more loans going out the door, which underscores the positive turn in our country’s economic landscape.”
The SBA study — which uses quarterly reports filed by financial institutions to compare small-business lending with total assets — scores and ranks institutions.