The Impact of the Small Business Lending Fund on Community Bank Lending to Small Businesses

21 Pages Posted: 11 Aug 2017

See all articles by Dean F. Amel

Dean F. Amel

Board of Governors of the Federal Reserve System

Traci Mach

Board of Governors of the Federal Reserve System

Multiple version iconThere are 2 versions of this paper

Date Written: July 2017

Abstract

Following the financial crisis, total outstanding loans to businesses by commercial banks dropped off substantially. Large loans outstanding began to rebound by the third quarter of 2010 and essentially returned to their previous growth trajectory while small loans outstanding continued to decline. Furthermore, much of the drop in small business loans outstanding was evident at community banks. To address this perceived lack of supply of credit to small businesses, the Small Business Lending Fund (SBLF) was created as part of the 2010 Small Business Jobs Act. The fund was intended to provide community banks with low‐cost funding that they could then lend to their small business customers. As of 31 December, 2013, the US Department of the Treasury reports that SBLF participants had increased their small business lending by $12.5 billion over their baseline numbers. The current paper uses Call Report data from community banks and thrift institutions to look at the impact of receiving funds from SBLF on their small business lending. The analysis controls for economic and demographic conditions, market structure and competition. Simple regression estimates indicate that participants in the SBLF program increased their small business lending by about 10 percent more than their non‐participating counterparts, in line with numbers reported by Treasury. However, estimates that control for the ongoing growth path in small business lending indicate no statistically significant impact of SBLF participation on small business lending.

Suggested Citation

Amel, Dean F. and Mach, Traci, The Impact of the Small Business Lending Fund on Community Bank Lending to Small Businesses (July 2017). Economic Notes, Vol. 46, Issue 2, pp. 307-328, 2017, Available at SSRN: https://ssrn.com/abstract=3016666 or http://dx.doi.org/10.1111/ecno.12081

Dean F. Amel (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Traci Mach

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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