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Big Banks Take a Knee on Lending to Small Business

Big Banks Take a Knee on Lending to Small Business

Even after the TARP program pumped billions in low-interest capital into banks, small business finds credit elusive. In a report out last month, the TARP committee concluded that it failed at improving credit access for small companies.

The money dumped into big banking had no strings – no requirement that any of it be lent back out.  As a result, the 22 biggest TARP recipients collectively cut their lending by nearly 4.6%, or $12.5 billion.  Loan portfolios to small business specifically was slashed by 9%, double overall lending, hitting that sector of the economy the hardest.

Unable to find credit, many of them have closed up shop.  Others continue the often elusive and ever challenging hunt for adequate financing and bankruptcy alternatives.

The federal government is currently contemplating new lending incentives for banks.  In the meantime, there are other solutions that can bridge the gap.  There are many reputable business restructuring firms (make sure to do the research, check BBB, etc…) that can help clean up a balance sheet overloaded with debt and then match borrowers with the right lender. Until big banks decide to get back in the game with small business, this is often the best option.