In 2011, the number of small loans ($1 million or less) to businesses dropped 4.7 percent from the year before, the Small Business Administration recently reported (pdf). The number of loans is now down to about three-quarters of its 2008 peak. Why has the number continued to drop since the end of the Great Recession?
I have written before about many of the big reasons. Demand is weaker than before the economy turned south, reducing demand for credit to finance operations and expansions. The weak real estate market has made it harder for small business owners to get property loans and has dried up the home equity credit market, which many small business owners relied on to finance their businesses. And Federal Reserve efforts to toughen bank lending standards in the wake of the financial crisis have meant that fewer small businesses qualify for bank credit.
