Small business lending in St. Louis declines

11/11/2011

Banks in St. Louis are distributing fewer loans, regardless of whether it's a small business owner trying to get capital for a startup or a prospective homeowner looking for funding for a house purchase, St. Louis Today reports.

The Federal Reserve Bank of St. Louis, which tracks upward of 70 banks throughout the area, found the value of loans issued by financial institutions dropped from $22.2 billion in the third quarter of 2010 to $20.4 billion the same time this year.

However, the organization notes this is mainly from a lack of demand, not entrepreneurs being turned down.

"What we're seeing is that lending standards have changed from prior to the economic crisis," Julie Stackhouse, senior vice president of the Federal Reserve Bank of St. Louis, told the news source. "Banks have plenty of cash to lend. The disconnect is finding borrowers that have the demand and the credit record to support a loan."

Other lending initiatives support Stackhouse's insight. For example, only approximately one-third of the $30 billion set aside by the Small Business Lending Fund was tapped before the program expired.