Banks Report Big Losses on Small Business Loans
No wonder banks are being stingy with small business loans these days. According to a Wall Street Journal article by Marshall Eckblad, financial institutions and the SBA are reporting big problems with small business lending over the past year. Last fall Bank of America took permanent losses on about 2.9% of its small business loans with an annual loss rate of almost 12%, twice that of a year ago. Century Bancorp also reported that small business loans contributed significantly to a large increase in its nonperforming assets, and Capital One Financial Corp. said January levels of nonperforming small business loans were up 70% from a year ago. The Small Business Administration reported SBA loan losses more than doubled in 2008 to nearly $1.3 billion, according to the article.
