SBA reports microloans up 27% from '96 to '97

The number of "microloans" loans under $100,000 made by U.S. banks overall increased by almost 27 percent from June 1996 to June 1997, according to a study recently released by the Office of Advocacy of the U.S. Small Business Administration, according to an SBA news release.

"Micro-Business-Friendly Banks in the United States, 1997 Edition" lists the 449 top "micro-business-friendly" U.S. banks those with significant lending activity in business loans of less than $100,000, the release stated.

"A 27 percent increase in the number of micro-business loans is significant," said SBA Chief Counsel for Advocacy Jere W. Glover in the release. "The Office of Advocacy's goal for these bank lending studies is to increase the capital pool for small businesses.

"By providing the public with information on lending trends, we give small businesses more power when looking for lending partners. We'll keep the reports coming."

Among the significant findings of the study are the following:

?Although banks made more microloans overall, the average size of such loans is declining. The total amount of microloans increased by just 4.1 percent.

The increased number of loans may reflect in part the expansion of small business credit card and credit line programs. The business lending sector's adoption of the credit-scoring techniques traditionally used in mortgage lending are making it more feasible for banks to make more small loans to small businesses.

?The 449 top micro-business-friendly banks, based on state-by-state rankings, held only 3.4 percent of total bank assets, but had 13.2 percent ($14.8 billion) of the dollar value of micro-business loans outstanding from all U.S. banks.

?The share of these banks' business loan portfolios that were microloans ranged from 12 percent to 100 percent, and 375 of the banks had a business loan portfolio composed solely of micro-business loans.

?The dollar amount of micro-business loans in the 449 banks ranged from $4.1 million to $616.6 million. Nineteen banks had at least $100 million in microloans outstanding.

?Eleven large banks with assets over $1 billion were among the 449 banks most active in micro-business lending.

The Office of Advocacy's lending studies are analyses of the Consolidated Reports of Condition and Income or "call reports" that banks must file quarterly with their bank regulatory agencies.

Four variables are used to determine the rankings in this report:

1. the ratio of micro-business loans to total bank assets;

2. the ratio of micro-business loans to total business loans;

3. the dollar value of micro-business loans; and

4. the number of micro-business loans.

The microlending report is a companion to the more comprehensive study, "Small Business Lending in the United States, 1997 Edition," which provides state-by-state rankings of 9,293 reporting commercial banks that provided small business lending data in their June 1997 "call reports" to federal banking regulators.

The Office of Advocacy also prepares an annual "Bank Holding Company Study," which helps small firms identify multibillion-dollar bank holding companies that are small-business-friendly.

The four annual editions of the Office of Advocacy's lending studies are on the Internet at http.//www.sba.gov/ADVO/lendinginus2.html/

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