Money When You Don’t Need It

The irony of small business credit these days comes down to a single frustrating truth: Banks will lend you money if you don’t really need it. Since the 2008 crisis, despite well-meaning efforts from many areas of government, small business lending remains depressed. And the kicker is we still really don’t know why.

Talk to the businesses, like a few of the ones profiled in this recent StarTribune article, and they claim that lenders are holding back, requiring huge amounts of paperwork, and looking for up to 3 years of profitability. Banks on the other hand claim that they want to help, but are faced with a lack of demand or overly strict regulations that are limiting their ability to lend.

Whatever, the reason, and it’s probably a little bit of both, why small businesses can’t get credit is a hot topic that is being aggressively looked into by officials:

“Ron Feldman, the local Fed’s senior vice president of supervision, regulation and credit, called the falloff of lending to small business “the most important story” in banking and said the Fed is looking at the possible impact of bank regulations.”

If it’s truly one of the “most important” stories out there, maybe it’s time for some fresh perspectives and new data on the problem.   From a safety and soundness perspective – the overarching goal of bank regulations – new data can certainly help.  And that’s what the WAIN Street Business Credit Health Index provides.  It gives lenders and regulators an independent, objective perspective on the risk and performance of SMB credit portfolios facilitating the conversations about sensible regulations that don’t restrict credit access.