- Over the last decade, the ratio of small business loans to total loans has, on average, demonstrably declined across banks irrespective of asset size aside from a brief spike as a result of the federal government’s Paycheck Protection Program.
- Although this decline is most pronounced in the community bank data, community banking organizations (CBOs)_ continue to hold a comparatively larger share of small business loans as a percentage of total loans relative to their larger bank counterparts.
- According to the Federal Reserve Bank of Kansas City’s External LinkSmall Business Lending Survey, respondents have reported a long-term trend in declining credit quality along with a corresponding tightening of credit quality standards. Moreover, respondents anticipate trade policy, labor costs, and inflation to negatively impact loan demand over the next 12 months.
Questions or comments? Please contact KC.SRM.SRA.CommunityBankingBulletin@kc.frb.org
Endnotes
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1
Community banking organizations are defined as having less than $10 billion in total assets.
The views expressed are those of the authors and do not necessarily reflect the positions of the Federal Reserve Bank of Kansas City or the Federal Reserve System.