Small Businesses They Are Tomorrow's Big Businesses
Despite a big push by bankers to make more small business loans, the percentage of such loans in bank portfolios declined by about 5 percentage points over the past three years according to an Eighth Federal Reserve District News bulletin.
At the end of the second quarter 1996, small business loans were about 56 percent of all business loans. "This is a healthy chunk of banks' loan portfolios," says Fed economist Michelle Clark Neely, "but not as healthy a chunk as we might have expected."
The ratios declined, Neely explained, because overall business lending grew faster than small business lending. "No one is quite sure yet how to explain the trend," she said, "but one possibility is that small business loans have gotten larger over time, and thus, are no longer counted in the small business loan category."
The decline is not a statistical fluke. Similar trends are apparent when one looks at small commercial loans collateralized by real estate.
Small businesses are simply bigger today than in the recent past.
