CFPB Report on Small Business Lending and the Great Recession Outlines Decline in Access to Credit and Uneven Recovery

The Consumer Financial Protection Bureau (CFPB) recently released a data point showing how small business lending has developed before, during, and after the recent Great Recession that took place from 2008-2009. The report found that small business access to credit declined during the recession, but it has unevenly recovered since.

The report, which uses geography and sources of lending to evaluate small business borrowing, says that “applying various measures of the Great Recession and Recovery to local geographies reveals that in many communities, their small business lending in 2017 still has not returned to pre-Recession levels.”

One of the main findings was the substantial variation in small business lending by county and state. There was a uniform decrease during the Great Recession, but the increases afterwards varied regionally. The Bureau found that states in the South and on the East Coast recovered more quickly than those in the West and the Great Plains.

Though the number of credit unions that offer lending products to small businesses has increased since the Great Recession, community banks have been less involved with small businesses. “The reductions in access to capital due to these challenges have been exacerbated by recent bank and branch closures, reducing the formal banking options available to small businesses,” the report reads.

The data point also recognizes that small businesses are prominent drivers of the U.S. economy, “employing just under 48 percent of all U.S. employees in 2017.”