Main Street Monday — Small Business Borrowing Conditions Gradually Improving

August 24, 2015

by Victoria Williams, Economist
SBA Office of Advocacy Quarterly Lending Bulletin

Small business borrowing conditions continued to improve gradually in the first quarter of 2015.

For example, the percent change in small business loans outstanding (in amounts of $1 million or less) remained positive or unchanged for the sixth consecutive quarter (Figure 1). Small business loans outstanding totaled $595 billion and remained relatively flat from the previous quarter, but year-over-year (Q1 2014 to Q1 2015) showed an increase of 1.7 percent.

Both commercial industrial (C&I) and commercial real estate (CRE) loans make up small business loans.

A careful look at these loans shows that they continue to indicate progress in capital availability for small businesses.

For example, C&I continues to maintain a positive uneven growth (Figure 2). In addition, the decline in the small business share of CRE loans has slowed. C&I loan standards changed little in the first quarter of 2015, but bankers reported easing standards and terms on loans secured by nonfarm nonresidential borrowing (Federal Reserve’s Board Senior Loan Officer Opinion Survey). While there was not a significant change in demand for C&I loans, respondents reported that the demand was stronger for all CRE loan size categories

Loan Sizes

The FDIC reports small business loans in three loan size categories for both C&I and CRE loans: loans under $100,000, $100,000 – $250,000, and $250,001 – $1 million.

The smallest size of small business commercial industrial loans outstanding (under $100,000) grew by 1.1 percent relative to the last quarter in 2014. Loans in this size category have grown by 11.6 percent from their lowest point, $118 billion in the third quarter of 2011.

Quarterly Lending Bulletin Q1 2015