The study finds that lending by banks to small businesses is down by 40% compared with the levels prior to the 2008 financial crisis. Those figures stand in contrast to a recovery in overall business lending from pre-crisis levels.
The study shows that the trend would be worse, if it wasn’t for the affinity of small banks for small businesses. Since the financial crisis, small business lending—loans of $1 million or less—has grown more rapidly at small banks than at larger institutions.
Here’s what regulators need to consider, given the trends the study highlights.