December 21, 2020                                          

CONTACT: Victoria Rosengarten, 816/881-2308

KANSAS CITY, MISSOURI –  The Federal Reserve Bank of Kansas City today released the results from the Third Quarter 2020 national Small Business Lending Survey. The quarterly survey of U.S. banks provides data on lending activity and terms for small businesses, a critical source of employment and economic growth for the country.

The survey found that outstanding balances on small business commercial and industrial (C&I) loans in the third quarter of 2020 grew over 80 percent compared with the third quarter of 2019 related primarily to Paycheck Protection Program (PPP) lending, but at a sharply lower rate compared with the second quarter of 2020.

Complete results of the survey are now available from the Kansas City Fed’s website.

Key findings include:

  • Outstanding small business C&I loan balances increased 80.7 percent from the third quarter of 2019. This was due primarily to a significant increase in loans guaranteed by the Small Business Administration (SBA), driven by borrowings through the PPP.
  • Outstanding balances secured by SBA guarantees remained high, increasing from 47 percent in the second quarter to 51 percent in the third quarter.
  • New small business C&I loan balances grew 15.3 percent from the same period in 2019, but declined 88.9 percent from the previous quarter, reflecting the mid-quarter close of the SBA’s PPP program.
  • Credit line usage decreased for the second consecutive quarter and application approval rates fell across all bank sizes.
  • Of those who responded to the survey’s special question on the impact of COVID-19 on small business lending, 93 percent indicated confidence in the ability to assess the financial position and repayment capacity of small business borrowers, an increase from 82 percent in the second quarter.

The Federal Reserve Bank of Kansas City’s national quarterly Small Business Lending Survey (FR 2028D) includes quantitative and qualitative data on credit market conditions for bank lending to small businesses across the country. The survey results provide detailed information on commercial banks’ lending activity and terms and offer a snapshot of small businesses’ access to credit.