Journal of Applied Finance & Banking

A Preliminary Causal Analysis of Small Business Access to Credit during Economic Expansion and Contraction

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• Abstract

  Access to credit is considered vital for small business survival. Many small-business owners in the United States indicate that one major obstacle to entry or expansion of their small business is the availability of sufficient intermediate and long-term capital to support their working capital and fixed-assets requirements. Relying on small business lending data from 2003 to 2009 collected under the Community Reinvestment Act (CRA), the paper examines small and medium-sized enterprise access to credit in the United States and makes policy and research recommendations. Data show that the number of loans, the average loan amount and the number of dollars available in credit to small business declined dramatically between 2007 and 2009. The paper addresses the concern that in reducing the ranks of the banking industry, the mortgage crisis and ensuing recession may have also pared small business lending.