WASHINGTON – The Federal Deposit Insurance Corporation (FDIC) today released its 2024 Small Business Lending Survey Report (SBLS). The 2022 SBLS is a nationally representative sample of U.S. banks that assesses small business lending practices and how banks are meeting the credit needs of the nation’s small businesses. Provide important insights.
SBLS collected responses from more than a quarter of the nation’s banks on topics such as how they approve and underwrite small business loans, geographic markets and competition, use of financial technology, and lending to startups. Overall, the FDIC survey found that while most banks have adopted new technologies, these innovations continue to offset the relationship-oriented and staff-intensive nature of small business lending, centered around local branch locations. It turned out that it had not been replaced.
In his keynote address today at the 12th Annual Community Banking Research Conference held at the Federal Reserve Bank of St. Louis, FDIC Chairman Martin J. Gruenberg said SBLS will help banks continue to emphasize relationship lending. He said it shows that he is doing so.
“From small banks to the largest banks, small business loans are generally underwritten and approved by the people. In this sense, small business loans in banks are the most consistent in the way they are implemented. This study also shows that the community banking model of small business lending remains highly competitive in today’s financial markets and remains vital to our communities. I confirm it.”
SBLS survey results
About half of U.S. banks are using or considering using financial technology in the small business lending process. However, nearly all banks are using in-person, high-touch technology to build relationships with their small business customers, while leveraging technology to help with regulatory compliance, data management, and servicing small business loans after loan approval. The emphasis was on practice. Remote communication methods such as email, file transfers, and video conferencing are widespread in the U.S. banking industry, but in many cases they complement rather than replace face-to-face interactions. For example, few banks allow borrowers to complete a small business loan application completely online. Almost all banks make small business loans of at least $1 million, and half of banks make loans of up to $3 million to small businesses. Additionally, banks typically carry the risk of small business loans on their balance sheets. When making small business loans, especially small loans, small businesses and large banks value different types of information. Smaller banks use more “soft” or less quantifiable underwriting information collected through relationships than larger banks. Especially for small loans, large banks tend to focus on using “hard” quantitative information from credit bureaus when evaluating loan applications. Approval times for small business loans are fast, especially for small loans from large banks. Three in 10 banks, including more than half of large banks, can approve small, simple loans within one business day. Three out of four banks can approve small, simple loans within five business days. Three out of four banks approve regular small business loans within 10 business days. Banks rely on and value branch locations and on-site visits to create and maintain small business lending relationships. Small business borrowers are typically located near bank branch locations. Competition between banks and credit unions and non-bank financial technology companies (FinTech) appears to be increasing. Small banks are more likely to compete regularly with credit unions, while large banks are more likely to compete regularly with fintech lenders, credit card issuers, and other financial companies. Small and large banks take different approaches to managing risk during loan origination. UPS. Large banks often rely on government guarantees (such as those provided by the Small Business Administration), while smaller banks often rely on soft information gleaned from interviews with applicants.
About the survey
The Small Business Lending Survey (SBLS) is a nationally representative survey that asks banks about their small business lending practices. Out of a sample size of 2,000 banks, approximately 1,300 banks responded, representing more than a quarter of all banks nationwide, for a survey response rate of 68%. This large, nationally representative sample provides a comprehensive picture of banks’ lending to small businesses. While the report documents many similarities across the banking industry, it also highlights some important differences, such as the differences between small and large banks.
