ILSR’s annual survey has found that independent businesses experienced solid revenue growth in 2012, buoyed in part by “buy local first” initiatives. But the survey also documented challenges facing independent businesses, most notably an increase in “showrooming” and competition from online retailers, tax and subsidy policies that favor their big competitors, difficulty obtaining loans, and a customer base still reeling from the recession. Continue reading
Viewing the small business lending tag archive
A critical function of our banking system is financing small businesses. But big banks are doing a rotten job of it. At the nation’s largest banks, small business lending has plunged 33% since 2009. Trying to cajole or compel them to do more won’t make much difference because the problem is largely inherent to their scale. Continue reading
Although they control only 21% of U.S. bank assets, small and mid-sized banks provide 54% of small business loans. Continue reading
As a share of their total assets, small business lending at the nation’s largest banks fell by 33% in three years. Continue reading
One of the most significant consequences of the consolidation of banking over the last decade is how much it has hindered the economy’s ability to create jobs. There’s no single solution to this problem, but one of the most promising strategies involves creating state-owned banks that can bolster the lending capacity of local banks, helping them grow and multiply. Continue reading
Small local and regional banks provide the majority of loans for small businesses. Expanding the nation’s network of small banks and preventing further consolidation in the banking industry is critical to ensuring access to credit for small businesses and new entrepreneurs. Continue reading
Community Development Financial Institutions (CDFIs) are mission-driven financial institutions that invest in businesses and community development in low-wealth areas.
Since it was created 2004, the Pennsylvania Fresh Food Financing Initiative (FFFI) has financed 84 grocery stores in underserved urban and rural communities across the state. Almost all of these stores are independent, locally owned businesses. They range from small greengrocers to natural foods cooperatives to large, full-service supermarkets. Continue reading
The U.S. Small Business Administration guarantees the value of loans made by banks to small businesses that fall just shy of qualifying for conventional loans. These guarantees allow banks to absorb more risk and thus to make loans to a much larger number of small businesses than they would otherwise be able to. While SBA-backed loans constitute only about 8 percent of overall small business lending, they account for 40 percent of long-term loans and thereby provide a critically important source of patient capital for growing small businesses.
Although small and mid-sized banks control only 22 percent of all bank assets, they account for 54 percent of small business lending. Big banks, meanwhile, allocate relatively little of their resources to small businesses. The largest 20 banks, which now command 57 percent of all bank assets, devote only 18 percent of their commercial loan portfolios to small business. Continue reading