Download Free The State Of Small Business Lending Book in PDF and EPUB Free Download. You can read online The State Of Small Business Lending and write the review.

The SSBCI provides funding to states, territories, and eligible municipalities to expand existing or to create new state small business investment programs, including state capital access programs, collateral support programs, loan participation programs, loan guarantee programs, and venture capital programs. This book examines the SSBCI and its implementation, including Treasury's response to initial program audits conducted by the U.S. Government Accountability Office and Treasury's Office of Inspector General. These audits suggested that SSBCI participants were generally complying with the statute's requirements, but that some compliance problems existed, in that, the Treasury's oversight of the program could be improved; and performance measures were needed to assess the program's efficacy.

Where are We Now?

United States. Congress. House. Committee on Small Business. Subcommittee on Economic Growth, Capital Access, and Tax

Published: 2014

Total Pages: 82


Get eBook

Small businesses were among the hardest hit in the Great Recession, accounting for more than 60 percent of the total jobs lost. The economic crisis was one focused on the banking sector, which is one reason for the disproportionately high impact on America s small businesses, which tend to be heavily credit dependent. While some aspects of the economy have recovered in the years since, small businesses have struggled, primarily due to a lingering credit gap that is the result of banks being less likely to make the smaller dollar loans those less than $250,000 that small firms (more than 70 percent) seek. A rapidly-growing financial technology (fintech) sector has quickly stepped in to fill this gap, and incumbent banks are exploring a variety of partnership strategies with the new entrants. Yet, while the much needed increase in sources for financing has been welcome by small businesses, these innovative fintech lenders have sparked concerns around transparency and the high costs charged to borrowers. These concerns are exacerbated by a “spaghetti soup” of regulators, where no one federal entity has oversight, and protections around small business borrowing slip through the cracks. This paper takes a detailed look at the current state of small business lending, the causes for the persistent low-dollar loan gap, the solutions being driven by innovative fintech lenders, and the key concerns around oversight and regulation. Finally, our objective is to provide regulatory recommendations that will protect small business borrowers, while not dampening the innovation that has proven so promising for filling the gap in small business access to credit.
Small businesses are the backbone of the U.S. economy. They are the biggest job creators and offer a path to the American Dream. But for many, it is difficult to get the capital they need to operate and succeed. In the Great Recession, access to capital for small businesses froze, and in the aftermath, many community banks shuttered their doors and other lenders that had weathered the storm turned to more profitable avenues. For years after the financial crisis, the outlook for many small businesses was bleak. But then a new dawn of financial technology, or “fintech,” emerged. Beginning in 2010, new fintech entrepreneurs recognized the gaps in the small business lending market and revolutionized the customer experience for small business owners. Instead of Xeroxing a pile of paperwork and waiting weeks for an answer, small businesses filled out applications online and heard back within hours, sometimes even minutes. Banks scrambled to catch up. Technology companies like Amazon, PayPal, and Square entered the market, and new possibilities for even more transformative products and services began to appear. In Fintech, Small Business & the American Dream, former U.S. Small Business Administrator and Senior Fellow at Harvard Business School, Karen G. Mills, focuses on the needs of small businesses for capital and how technology will transform the small business lending market. This is a market that has been plagued by frictions: it is hard for a lender to figure out which small businesses are creditworthy, and borrowers often don’t know how much money or what kind of loan they need. New streams of data have the power to illuminate the opaque nature of a small business’s finances, making it easier for them to weather bumpy cash flows and providing more transparency to potential lenders. Mills charts how fintech has changed and will continue to change small business lending, and how financial innovation and wise regulation can restore a path to the American Dream. An ambitious book grappling with the broad significance of small business to the economy, the historical role of credit markets, the dynamics of innovation cycles, and the policy implications for regulation, Fintech, Small Business & the American Dream is relevant to bankers, fintech investors, and regulators; in fact, to anyone who is interested in the future of small business in America.
This book examines the Small Business Lending Fund, with a focus on the supply and demand for small business loans. Congressional interest in small businesses reflects, in part, concerns about economic growth and unemployment. Small businesses, defined as having fewer than 500 employees, have played an important role in net employment growth during previous economic recoveries. However, recent data show that net employment growth at small businesses is not increasing at the same rate as in previous economic recoveries. Some have argued that current economic conditions make it imperative that the federal government provide additional resources to assist small businesses in acquiring capital necessary to start, continue, or expand operations and create jobs. Others worry about the long-term adverse economic effects of spending programs that increase the federal deficit.