Historically, small businesses have tended to turn to local lenders for credit. In recent years, however, technological advances in processing information and assessing credit risk have raised the potential for loosening the geographic ties between small business borrowers and lenders. This...

In the presence of imperfect information, both large and small banks try to find alternative ways to identify creditworthy borrowers. Lending relationships are one way to go about this. Relationships between banks and small businesses tend to be much closer than those between banks and large...

Microloans, also known as microfinancing, peer-to-peer lending, and crowdfunding, started out as a means for individuals, such as impoverished borrowers who lack collateral and underprivileged women in third world countries, to provide for themselves. The way microloan markets operate is quite...

Nationwide in the U.S. over the past 15 years, small businesses generated 64 percent of the net new job growth. Small businesses with fewer than 500 employees, a definition used by the Small Business Administration (SBA), represent 99.7 percent of all employer firms, and employ more than half of...

This Economic Letter examines what the data say about the relationship between the degree of competition in and total volume of small business lending in local geographic banking markets.

Most small business lending from banks originates with institutions that have a local branch, but “out-of-market” lending does not. Supporting the view that proximity is conducive to lending, I find that only about 10 percent of small business lending is from banks with no branch in the...

Small businesses have relied considerably on securitized markets for credit. The recent financial crisis led to a virtual cessation of securitization of some of the loans used by small businesses, such as commercial real estate mortgages, vehicle, and credit card loans. In addition, values of...