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Will the Volcker Rule Help Small Business Lending?

Small business owners occupied with holiday sales and closing out their 2013 books likely missed the December news about the approval of the Volcker Rule. Banking regulations are pretty dry, after all, and there’s no bright line connecting this one to the concerns of the average nail salon or Internet retailer.

But even though it didn’t make big news in entrepreneurial circles, this rule could have an outsize impact on small businesses. That’s because it may prod banks back into the traditional lending arena that many of them largely abandoned more than a decade ago. And if more small business owners can get relatively low-interest bank loans—rather than relying on the high-cost alternative lenders that have sprung up to meet demand­—that could free up capital that would allow them to hire and expand their companies.