June 20, 2023
SBA Hot Topic Tuesday – Bankers are Reporting Tightening Credit Standards and Less Demand
Recently published by the SBA Office of Advocacy, the June 2023 Small Business Economic Bulletin informs that most small business indicators are looking positive. “However, instability in the banking sector and increasing interest rates could cause concern for small businesses.”
These are the facts about small business financing:
- Bankers are reporting lower demand for all loan sizes, and small business loan demand dropped to the COVID-19 recession levels.
- Credit standards have continuously tightened for commercial industrial and commercial real estate loans over the last few quarters.
- For the last five years, quarterly new small business loans have remained stable besides the spikes caused by assistance programs in 2020 and 2021.
- The number of loans per bank has declined leading to higher average dollar loans.
- In the last quarter of 2022, the number of small business loan applications per bank declined.
- Approval rates for small business loans also saw a small reduction in the last half of 2022.
- Over the last five years, noncorporate borrowing, which consists primarily of small businesses, was less than half of the total aggregate level of corporate borrowing.