Small businesses postponed borrowing in 2011, report says
Small businesses continued to postpone borrowing in 2011, according to a report by the U.S. Small Business Administration.
Overall lending and borrowing by financial depository institutions and small businesses was weaker in 2011 than in the previous year, the report said.
The availability of credit is paramount to small business health, growth and survival, wrote Victoria Williams, author of the report.
Annually, the Office of Advocacy prepares the study that examines the lending environment of depository lending institutions. Here are the highlights:
- While business lending in amounts of more than $1 million increased, small business lending under $1 million remained restrained. Small business loans outstanding in June 2011 were valued at $606.9 billion, down 6.9 percent from $652.2 billion the previous year.
- Borrowing declined for both types of small business loans—commercial real estate and commercial and industrial loans under $1 million—but at a slower rate for CRE. The value of the smallest C&I business loans or micro loans, those less than $100,000, declined by 12.7 percent, from $137.2 billion in June 2010 to $119.8 billion in June 2011. CRE and C&I micro loans combined were valued at $139.5 billion in 2011.
- Megabanks—those with $50 billion or more in assets—accounted for 38 percent of small business loans outstanding and for 51 percent of the total decline in small business loans.