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What Really Spurs Small-Business Lending

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The study also found that well capitalized banks lend to small businesses at a higher rate overall. This has particular relevance given that capitalization has been a major issue in the government's overhaul of financial regulation. Financial industry lobbyists have protested that higher capital standards would hurt banks' ability to lend, and therefore stifle economic growth. Yet the SBA study shows that well-capitalized banks have continued to lend at higher rates throughout the crisis.

Ultimately, however, creating a favorable environment for small-business lending depends on more than just the banks. Because the reality right now is that few small businesses are even applying for loans. According to the most recent Small Business Optimism Index , a monthly survey released by the National Federation of Independent Business, only 1% of business owners said financing was their top business problem, one of the lowest readings in the survey's 27-year history.

Until the broader economic climate improves, the demand for small-business loans will remain weak. And that's bad news not only for start-ups, but for banks as well.