Report Shows Banks Increased Small Business Lending

American banks increased their micro-business loans by 10.1 percent in 2001, according to "Micro-Business-Friendly Banks in the United States," a report issued in August by the Office of Advocacy of the U.S. Small Business Administration (SBA).

The report is meant to serve as a useful tool for small businesses and their search for capital, identifying banks in each state that are the most "micro-business-friendly" in their lending of amounts under $100,000. The report could help independent booksellers target their search for lending institutions, noted John McDowell, a spokesperson for the Office of Advocacy.

Among the highlights, this year's report showed that the dollar value of small business lending continued to increase in 2001 (between June 2000 and June 2001), though more slowly than in recent years. The report notes that both borrowers and lenders held off on new borrowing and lending in reaction to a slowing economy and increased uncertainty. Micro-business lending outstanding (business loans under $100,000) totaled $126.8 billion in June 2001, an increase of $5.4 billion or 4.4 percent over 2000.

The report also noted that available evidence finds the source of much of the increase in micro-business loans to be the promotion of business credit cards by major banks and finance companies. Non-credit-card-related loans under $100,000 increased by 2.3 percent in amount and by less than 1 percent in number, according to preliminary findings.

In 2000, some 764 large banks and bank holding companies made 4.15 million micro-business loans valued at $55.2 billion, according to Community Reinvestment Act data.

The table ranks banks in each state in two separate tables, one for large banks and one for small banks. The leading large lending institutions were American Express, which was ranked first in 12 of the 50 states; Wells Fargo, ranked first in seven states; and U.S. Bancorp, ranked first in four states.

To access the report, go to http://www.sba.gov/advo.

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Source: Office of Advocacy of the U.S. Small Business Administration, "Micro-Business-Friendly Banks in the United States 2001 Edition."