On October 2, the FDIC issued its 2024 Small Business Lending Survey Report (SBLS), based on data collected in 2022. The survey provides insights into small business lending practices, including loan approval processes, geographic markets, competition, use of financial technology, and lending to start-ups.
According to the report, small business lending is “relationship-oriented and staff-intensive,” centered around local branch offices, even as banks are adopting new technologies. The survey revealed that approximately half of U.S. banks are using or considering financial technology in their lending processes, but in-person interactions remain important. Furthermore, in making credit decisions, small banks rely more on “soft” information from relationships, while large banks rely more on “hard” quantitative data from credit bureaus, especially for smaller loans. Additionally, the report showed that most banks make small business loans of at least $1 million, with half making loans up to $3 million.
The FDIC also found that approval times for small business loans are generally fast, with many banks able to approve simple loans within one to five business days. Branch locations and on-site visits are “highly valu[ed]” for maintaining lending relationships, with competition with credit unions and non-bank financial technology companies increasing. Lastly, the FDIC highlighted that large banks often use government guarantees for start-up loans, while small banks rely on information gathered from meeting applicants.
