Small Business Lending Down

Small business lending continues to fall, despite recent stimulus incentives, CNN Money reports. In the just-ended quarter, the Small Business Administration’s (SBA) flagship program backed 30% fewer loans than it did a year ago, and 55% fewer loans than it did in 2007, pre-recession.

The SBA’s 7(a) program approved 11,580 loans in the quarter ended June 30, valued at $2.5 billion. Down from 16,490 loans, worth $3.4 billion, in the same quarter last year. In the first nine months of its 2009 fiscal year, the SBA has approved roughly half as many loans as it did last year.

With sales slow, many business owners are looking for financing to help them weather the recession, but banks have clamped down on making the risky loans, the SBA reported. Additional incentives from the SBA, authorized as part of February’s Recovery Act, have helped spur some increased lending but haven’t sparked a complete rebound.

Still, SBA officials point to post-stimulus lending trends as a sign that the situation is at least better than it would have otherwise been. Comparing the months before and after the February 17 stimulus signing, the SBA reports a 24% jump in the number of 7(a) loans it has backed.