Issues on Small Business Lending

Here are two good articles that talk about the lack of lending to small businesses.

The first issue is the problem with regulators, not regulations. We have heard numerous complaints of inconsistency of regulators in how they deal with financial institutions regarding small business lending. Some banking regulators are overzealous when it comes to the risk of a small business loan.

The second story addresses the issue of financial institutions treating small business loans as they do big business loans. The issue here is why do financial institutions make small business lending decisions on personal equity and not just on the performance of the business? That’s what they do for big business lending, which is solely based on the ability of the business to pay.

These are crucial issues that need to be resolved for small business to start getting access to capital they need to grow.