Monday, January 25, 2010

Update: Business Lending Performance by the Top 22 TARP Recipients

Banks continue to be criticized for a lack of lending to US businesses, especially small businesses. As these banks digest sweeping proposals from President Obama affecting their industry, let’s take a look at the latest data on lending activities by financial institutions who received capital infusions under the government’s TARP program.

Since I last looked at this data, the overall level of loans outstanding by business borrowers continued to decline. Since program reporting began in February 2009, the average loan balance outstanding has decreased 10.2%. The latest data indicates that balances are stabilizing, but we need a few more months of data to see if this trend continues. (Click on image to enlarge)

Since program inception, commercial and industrial (C&I) loans outstanding declined 14.2% while commercial real estate (CRE) loans held steady. Looking at new originations, new loan originations have risen steadily since August, driven by a 53% increase in new C&I loans. Unfortunately for small businesses, these new loans were made to larger firms.

Looking at small business data separately, loans outstanding fell 4.5% since April, while new originations are trending downward.

Unfortunately, the rate of decline in small business lending by the top TARP recipients continues to accelerate; a bad sign for struggling small businesses.

5 comments:

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  3. Luckily SBA programs are there to help small businesses to grow and compete with large firms. On your next post please write something about Small Business Administration.

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