Bank Loans Up, But Not for Small Biz: FDIC

The Federal Deposit Insurance Corp says the American banking industry is on the upswing. The number of institutions on the agency's problem list fell for the first time in nearly five years. Bank failures are down. Loans are growing in size.

Is business lending back, then? Well, not really. Commercial lending is up, but small business lending is not.

According to the F.D.I.C., while the nation’s total commercial and industrial loan portfolio grew by $34 billion, or almost three percent, outstanding loans to small businesses fell by $2.5 billion, or 0.4 percent.

Since America's smaller banks are the backbone for job creation, this isn’t good news, and it won’t help in bringing down the country's 9.1 percent unemployment rate.

Small-business loans are defined as those of $1 million or less, and exclude agricultural loans and loans secured by farmland. As of the end of June, the total commercial and industrial loan portfolio amounted to $1.2 trillion. Small-business loans made up almost exactly half of that, or $607 billion. Not a bad showing, but nothing to boast about, either. There is still a ways to go.

Read more about the FDIC survey in The Economic Times.

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