Though lending standards for banks have been found to be slowly declining in the past few years, it seems that there are still a number of loan applicants who are having trouble securing a loan. In particular, small business owners surveyed by the American Sustainable Business Council were found to still have trouble gaining loans in the five years since the financial crisis.
According to the Associated Press, the survey looked at 515 businesses with three to 99 employees. More than half of the companies had less than 10 employees. Of collective respondents, 45 percent of business owners said gaining credit is a problem for their firm, with at least half of business owners in the Northeast and the West citing this as an issue.
“Most of the survey participants, 91 percent, said they support allowing community banks, cooperatives and credit unions to compete more actively with commercial banks to help meet the needs of small businesses,” the AP said. “Changes in federal law would be required for small financial institutions to increase their small business lending.”
For banks or other financial institutions, lending to small businesses can not only improve their profits, but can often help improve the economy as a whole by helping local businesses grow. While many lenders are still hesitant to lend after the financial crisis, with risk management tools and other resources, banks can more accurately determine if an applicant is qualified. That way, they can remain solvent and still confidently lend to small businesses and other borrowers.
