Banks Tighten Lending to Small Businesses; SBA Loan Guarantees Drop

A Federal Reserve survey this week showed that 75 percent of lenders are tightening credit requirements for small businesses. This is not good news if you want a loan to start or grow a business. The Senate Committee on Small Business and Entrepreneurship, led by Senator John Kerry, says the SBA should guarantee more loans, through their 7(a) and 504 loan programs.

But SBA lending is down too. The 7(a) loan program lending is down 55 percent and the 504 program is down 36 percent from last year.

Senator Kerry sent a personal letter to Acting SBA Administrator Sandy Baruah, urging the SBA to reduce or eliminate fees on these loans and eliminate other barriers for lenders.

Let's hope Senator Kerry's personal pleas help loosen the tight credit situation for small businesses.