CRA Data Shows More Small Business Loans for Fewer Dollars

CRA, small business loans, SMBs, Community Reinvestment Act

The number of small business loans made in 2021 increased but the dollar amount decreased. 

The same was true of small farm loans, according to a fact sheet about findings from analysis of nationwide summary statistics for 2021 Community Reinvestment Act (CRA) data that was released Thursday (Dec. 15). 

The total number of small business loans, including both originations and purchases, increased 12.6% in 2021 compared to the previous year, but the dollar amount of the loans decreased by 21%. 

In 2021, the were about 9.4 million of such loans, and their dollar amount totaled $371 billion. 

Similarly, the total number of small farm loans increased by 26.4% in 2021 compared to 2020, while the dollar amount decreased by 1.2%. 

These figures include data compiled for banks, savings and loan associations, and savings banks reporting under the CRA regulations. 

The data was compiled by the three federal banking agency members of the Federal Financial Institutions Examination Council (FFIEC) with CRA responsibilities: the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency. 

“The CRA requires the federal banking agencies to use their authority when examining financial institutions to encourage such institutions to help meet the credit needs of the local communities where the institutions are chartered, consistent with the safe and sound operations of such institutions,” the fact sheet said. 

Most of the loan originations in 2021 were for amounts under $100,000, with about 92% of the small business loans and 83.8% of the small farm loans being below that threshold. 

In terms of the dollar amount of the loans originated, about 35.5% of the small business loan dollars and 31.5% of the small farm loan dollars were included in loans of less than $100,000. 

Small businesses with revenues of $1 million or less received about 47.1% of the small business loan originations and 29% of the dollars, while small farms of the same size accounted for 59.3% of the small farm loan originations and 67.7% of the dollar amount. 

PYMNTS research has found that the overall financial health of small- to medium-sized businesses (SMBs) is better than a previous, pre-pandemic peak and is better than had been seen during the Great Recession. 

At the same time, SMBs are facing inflationary pressures that impact consumer sentiment and are thus a headwind to growth, according to the “Main Street Index Q3 2022.”