The biggest banks in the U.S. are making far fewer loans to small businesses than they did a decade ago, ceding market share to alternative lenders that charge significantly higher rates, the Wall Street Journal reported today. Together, 10 of the largest banks issuing small loans to business lent $44.7 billion in 2014, down 38 percent from a peak of $72.5 billion in 2006, according to an analysis of the banks’ federal regulatory filings. Through August, banks this year originated 43 percent of business loans of up to $1 million, down from 58 percent for all of 2009, according to PayNet Inc., a tracker of small business credit. The change has opened the door to higher-cost alternatives: Nonbank lenders increased their market share to 26 percent from 10 percent, with corporations that lend to their business customers or suppliers making up the balance.
