The lending to the small business has drastically decreased by $40 billion since the second quarter of 2008. In the first quarter of 2010, the lending was about $670 billion where as it was $710 in the year 2008.

A survey by the Barlow Research Associates Inc., conducted last year, found that there are few reasons because of which small business owners are facing problems in getting credit from banks. The reasons for not getting credit from banks:

• There is a serious lack of collateral credit worthy borrowers.
• Since the start of the recession, there is 30 to 40 percent decline in the real estate values. Many of the small businesses want to get credit in order to expand their business or just to survive, but they do not have any equity to borrow against.
• It is mainly due to the recession which has created havoc on small business owners to get credit from banks.
• The banks are also having restrictions in lending because of the tightened lending standards.
• There was a abrupt drop in the lending last month due to the failure of the funding for the Small Business Administration’s flagship lending program last month. Banks were able to make $400 million in loans with the support of administration in June when compared with $1.5 billion in May.
• The customers are still thinking that the recession is still continuing. Unless, the customers become confident and start purchasing there will be no much improvement in the small businesses.