CONSUMER FINANCIAL PROTECTION BUREAU | JANUARY 2020 

Data Point: 

Small Business Lending 

and the Great Recession 

Consumer Financial Protection Bureau’s Office of Research 
 

 

 

 

 

This is another in an occasional series of publications from the Consumer Financial Protection 

Bureau’s Office of Research. These publications are intended to further the Bureau’s objective of 

providing an evidence-based perspective on consumer financial markets, consumer behavior, 

and regulations to inform the public discourse. See 12 U.S.C. §5493(d). 1 

1 This Data Point was prepared by Karl Schneider, Chris Stocks, and Jason Dietrich 

1 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION 
 

 

Table of contents 

Table of contents.........................................................................................................2 

1. Introduction & Background .................................................................................3 

1.1 Introduction.............................................................................................. 3 

1.2 Background............................................................................................... 4 

2. Data........................................................................................................................7

3. Small Business Lending Before, During, and Following the Great

Recession..............................................................................................................9 

3.1 Overview ................................................................................................... 9 

3.2 State-Level Analysis................................................................................ 12 

3.3 County-Level Analysis ............................................................................ 16 

3.4 Counties Segmented by Growth Quintile............................................... 21 

4. Small business lenders......................................................................................26 

5. Conclusion ..........................................................................................................32 

Appendix A: Data Sources .......................................................................................33 

Appendix B: Works Cited .........................................................................................34 

Appendix C: Additional Figures...............................................................................37 

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1. Introduction & Background

1.1 Introduction

This Data Point article focuses on small business credit, examining patterns in small business 

lending (SBL) and the sources of this lending among depository institutions pre-Great Recession 

(2004-2007), through the Great Recession (2008-2009), and then throughout the post-Great 

Recession Recovery period (2010-2017). 2 Unlike previous studies of small business credit, we 

drill down to analyze variation in lending and sources of lending across a number of different 

community characteristics. What becomes clear from this granular analysis is the significant 

variation in impacts of the Great Recession and the Recovery on different geographies. 

This report offers a descriptive story of small business lending during these three time periods, 

which illustrates the geographic landscape and variation of this lending. This contributes to the 

efforts that the Bureau, other government agencies, and private industry are making to improve 

access to credit. The following analysis will feature descriptive statistics and discussion of 

trends, primarily through a geographic lens, to explore variation across the country during and 

after the Great Recession. Any discussion of causes of the Great Recession, or any causal 

linkages between the trends observed in small business lending and other economic activity 

during or after the Great Recession itself, are outside the scope of this report. 

Key Findings 

 Overall, small business lending growth during the Pre-period (2004-2007) was strong,

but gains were greater in urban, more populated, wealthier, and more educated counties.

 Although there was substantial variation in small business lending growth during the

Pre-period (2004-2007), virtually all counties were affected similarly by the Great

Recession (2008-2009).

 Overall, small business lending growth was weak during the Recovery (2010-2017). In

the typical county, by 2017 small business lending had only recovered to roughly half of

2004 levels.

2 The Bureau’s analysis ends in 2017 due to data limitations. 

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 The number of large banks, community banks, credit unions and thrifts has been

declining since 2004.

 Compared to credit unions, each of the other lender types is relatively more likely to offer

small business lending products. However, the proportion of credit unions that offer

small business lending products has roughly doubled since 2004 (from 10 percent to 20

percent).

1.2 Background 

According to the Small Business Administration (SBA) Office of Advocacy, there were 

approximately 30 million small businesses employing just under 48 percent of all U.S. 

employees in 2017. 3 In addition to comprising a major component of the U.S. economy, small 

businesses have also had a significant impact on job creation, generating 62 percent of net new 

private sector jobs since the Great Recession, which is consistent with the trend over the last 25 

years. 4 Given their importance, much has been written about small businesses, especially the 

impact of the Great Recession on small businesses, and small business’ role in the Recovery. 

Much of this work has focused on two important findings, significant declines in small 

businesses caused by the Great Recession, and the decline in the number of community banks, 

which are a key source of credit for small businesses. 5 

3 For more details see https://www.sba.gov/sites/default/files/advocacy/2018-Small-Business-Profiles-US.pdf. For the purposes of 

this statistic, the SBA defined all small businesses as those with fewer than 500 employees. 

4 Headd, Brian. "SMALL BUSINESS FACTS: SMALL BUSINESS JOB CREATION DECONSTRUCTED." SBA: Office of Advocacy, 

Sept. 2017, cdn.advocacy.sba.gov/wp-content/uploads/2019/06/10111825/Job_Creation_fact_sheet_FINAL_0.pdf. These 

results raise the question of how small businesses can generate nearly two-thirds of net new jobs yet have a share of total 

employment that is less than 50 percent and slightly declining. For small businesses with less than 500 employees, growth will 

push employment for some of these businesses above the 500-employee level and into the large business classification. The 

growth in employment for this subset of small businesses counts toward small business job gains, i.e. the 62 percent number. 

However, the total employment of these small businesses would not count toward the percent of total employment comprised of 

small businesses (i.e. the 48 percent number), since these formerly small businesses are not large firm employers. See 

https://cdn.advocacy.sba.gov/wp-content/uploads/2017/08/04125711/Frequently-Asked-Questions-Small-Business-2018.pdf 

for more details. 

5 As one example, the 2019 Small Business Credit Survey indicates that 44 percent of applicants for small business credit in the 

sample sought credit from small banks. (https://www.fedsmallbusiness.org/medialibrary/fedsmallbusiness/files/2019/sbcsemployer-firms-report.pdf) 

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On the business side, firm entry declined during the Great Recession, failing to compensate for 

failing older businesses resulting in a “missing generation” of entrepreneurs.

6 Other work by the 

Federal Reserve showed that jobs at small businesses declined between 2007 and 2009.

7 

On the lender side, a recent study commissioned by the SBA Office of Advocacy and conducted 

by researchers at DePaul University showed that lending from banks to small businesses 

increased from $308 billion in 1994 to $659 billion in 2008, but then fell 18 percent down to 

$543 billion by 2011. 8 Researchers have identified a number of demand- and supply-side effects 

that have impacted the ability of traditional financial institutions to offer small business credit 

compared to other financial products. 9 The reductions in access to capital due to these 

challenges have been exacerbated by recent bank and branch closures, reducing the formal 

banking options available to small businesses.

10 Between 2009 and 2011, 389 banks across the 

nation failed.

11 Additionally, from 2008 to 2016, 6,008 bank branches closed. 12 Bank failures 

6 Siemer, Michael. "Firm Entry and Employment Dynamics in the Great Recession." Federal Reserve Board: Finance and Economics 

Discussion Series, vol. 56, 2014. 

7 Burgen, Emily, and Dionissi Aliprantis. “Measuring Small Business Employment over the Business Cycle.” FRB Cleveland 

Economic Trends, 22 May 2012. 

Tasci, Murat, and Emily Burgen. “Job Creation by Small and Large Firms over the Business Cycle.” FRB Cleveland Economic 

Trends, 6 Feb. 2012. 

Laderman, Elizabeth. "Small Businesses Hit Hard by Weak Job Gains." Federal Reserve Board of San Francisco, vol. 26, 9 Sept. 

2013. 

8 Cole, Rebel A. "How Did the Financial Crisis Affect Small Business Lending in the United States?" SBA: Office of Advocacy, Nov. 

2012. 

9 Mills & McCarthy discussed the impact of long application times, delay in receiving the capital, and lower acceptance rates on 

moving borrowers of small business loans away from traditional financial institutions. They found that relatively stable 

transaction costs for commercial loans, resulting in originating more high dollar commercial loans opposed to those to small 

businesses. Mills, Karen Gordon, and Brayden McCarthy. "The State of Small Business Lending: Credit Access during the 

Recovery and How Technology May Change the Game." Harvard Business School: Working Paper, vol. 15, no. 004, 22 July 2014. 

Bordo and Duca found that declines in small business lending relative to total commercial lending were attributable to the DoddFrank Act, which caused a tightening of bank standards for small businesses. Bordo, Michael D., and John V. Duca. "THE 

IMPACT OF THE DODD-FRANK ACT ON SMALL BUSINESS." NBER WORKING PAPER SERIES, vol. 2450, Apr. 2018. The 

Government Accountability Office authored a report that showed a modest impact of regulations on community bank small 

business lending. Government Accountability Office. "Effect of Regulations on Small Business Lending and Institutions Appears 

Modest, but Lending Data Could Be Improved." 5 Sept. 2018, www.gao.gov/reports/GAO-18-312/#Highlights. 

Research by the Cleveland Fed pointed to tightened credit standards among financial institutions, lower creditworthiness among 

small businesses, and declining demand by small businesses all contributing to a longer-term trend in the decline in small 

business lending. Wiersch, Ann Marie, and Scott Shane. "Why small business lending isn’t what it used to be." Economic 

Commentary/Cleveland Federal Reserve 14 (2013): 2013-10. 

10 Nguyen, Hoai-Luu Q. 2019. "Are Credit Markets Still Local? Evidence from Bank Branch Closings." American Economic Journal: 

Applied Economics, 11 (1): 1-32. 

11 FDIC, Bank Closing Summary. For the information on bank closures during and following the Great Recession please reference: 

https://www.fdic.gov/bank/historical/bank/. 

12 National Community Reinvestment Coalition. "Bank Branch Closures from 2008-2016: Unequal Impact in America’s Heartland." 

8 May 2017. 

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and closures reduce the number of competitors and could have an adverse impact on the supply 

of credit and the terms and conditions of credit. As an example, counties more reliant on the top 

four banks prior to the Great Recession, i.e. more SBL concentrated among the top four banks, 

had less credit available for small businesses, higher interest rates on loans, and an overall 

contraction of economic activity.

13 

This paper extends the research previously cited by looking more deeply at small business 

lending at a geographical level and analyzing the evolution of small business credit granting 

institutions following the great recession. Different descriptions of small business lending are 

analyzed in Section 3 of this paper and Section 4 looks at the evolving landscape of financial 

institutions granting small business loans. 

13 Chen, Brian S., et al. "The Decline of Big-Bank Lending to Small Business: Dynamic Impacts on Local Credit and Labor Markets." 

NBER Working Paper Series, no. 23843, Sept. 2017. 

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2. Data

The Federal Financial Institutions Examination Council’s (FFIEC) Community Reinvestment 

Act (CRA) data is a primary data source used to analyze patterns in small business lending. 

Each year, banks and thrifts that exceed a stated asset threshold must report information on the 

number and dollar amount of originated loans, lines of credit and credit cards to small 

businesses and farms by census tract. CRA defines “loans to small businesses” as originated 

loans with loan amounts less than $1 million that were reported on the Call Report as secured by 

nonfarm or nonresidential real estate or as commercial and industrial loans, and “loans to small 

farms” as originated loans with loan amounts less than $500,000 that were reported to the Call 

Report as secured by farmland and to finance agriculture production and loans to farmers. 

According to the FFIEC, CRA data covers 71 percent of small business loans outstanding (by 

dollars) of institutions reporting under the Bank Call Report.

14 We rely on CRA data here, 

because Call Report data is at the national level and therefore not suited for the type of 

geographic analysis in this paper. CRA data is available from 2004-2017, and the figures in this 

Data Point feature data running up until 2017 to reflect the data available. The best benchmark 

to assess the impact of the Great Recession in comparison to the pre-period is 2004 due to the 

fact that it represented the conditions of the pre-Recession while allowing for time for the 

economy to recover from the 2001 Recession. 

Although CRA data provides a useful picture of the small business lending market at both the 

national and local levels, the data has limitations. First, the definition of “small business loan” is 

based off the size of the loan rather than the size of the business. As a result, CRA data includes 

small-dollar loans to large businesses and excludes large-dollar loans to small businesses. A 

limitation of the CRA threshold of 1 million and $500,000 is that fewer loans are considered 

over time because the real value of the threshold falls as a result of inflation. Part of the story of

decreasing small business loans under this threshold could be as a result of those businesses 

now applying for loans over $1 million. Second, only banks and thrifts that meet a particular 

asset size threshold for the prior two years are required to report (the 2016 and 2017 reporting 

thresholds were $1.226 billion). Smaller banks, credit unions, online lenders and other nondepository lenders are not required to report CRA data. Although CRA-reporting entities still 

comprise the largest portion of the small business lending market, CRA data could present an 

incomplete assessment of small business lending patterns if the Great Recession had different 

14 See page 2 of this report from the FFIEC. “Findings from Analysis of Nationwide Summary Statistics for 2016 Community 

Reinvestment Act Data Fact Sheet”. 2017. https://www.fdic.gov/news/news/press/2017/pr17088a.pdf. 

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impacts on non-CRA reporters. 15 The final important limitation of CRA data is that term loans, 

lines of credit, and credit cards are aggregated in the data. This is a concern for small business 

lending since cards and loans are very different products and serve different business purposes. 

The FFIEC Bank/Thrift Call Report and the National Credit Union Administration (NCUA) 

Credit Union Call Report are additional data sources for the analysis of small business lending. 

Each quarter, banks, thrifts, and credit unions file a report of their financial condition to their 

regulator. Although there are significant differences between the two call reports, this report 

will only use a relatively similar, small subset of call report data to flag whether a financial 

institution offers small business lending products. Banks and thrifts are flagged as “small 

business lenders” if the institution has reported at least one small business loan/line 

outstanding as of year-end.

16 Credit unions are flagged as small business lenders if they have at 

least one-member business loan outstanding on their books in the last year.

17 

A variety of additional data sources are used to augment the CRA and Call Report data. These 

data include the American Community Survey (for educational attainment), County Business 

Patterns (counts of employer businesses), Census Population statistics, FDIC Community Bank 

indicator, Local Area Unemployment Statistics, Non-employer Statistics (counts of nonemployer businesses), Small Area Income/Poverty Estimates (for estimates of household 

income and poverty rates), and Summary of Deposits (for matching lenders across datasets). 

See Appendix A for sources and additional information about each dataset. 

15 See Section 3.3.1 of the CFPB White Paper. "Key dimensions of the small business lending landscape." 10 May 2017, 

https://files.consumerfinance.gov/f/documents/201705_cfpb_Key-Dimensions-Small-Business-Lending-Landscape.pdf for a 

more robust discussion on industry composition in small business lending. 

16 Derived from FFIEC Bank Call Report 031 and 041: Schedule RC-C, part II: FFIEC 031 and 041 Bank Call Reports, March 2019, 

Schedule RC-C, part II. Banks report all loans made under $1 million. 

https://www.ffiec.gov/pdf/FFIEC_forms/FFIEC031_FFIEC041_201906_i.pdf. 

17 A commercial loan is counted as a Member Business Loan if the member has more than $50,000 in balance outstanding. For a 

detailed discussion regarding how credit union Business Loans are counted see the NCUA 5300 Call Report Schedule A: Section 4 

https://www.ncua.gov/files/publications/regulations/call-report-instruction-dec-2018.pdf. 

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3. Small Business Lending

Before, During, and

Following the Great

Recession

3.1 Overview 

In order to discuss the broader effects of the Great Recession, we analyze small business lending 

patterns over three periods: the “Pre-period,” the “Great Recession,” and the “Recovery.” 

According to the National Bureau of Economic Research, the official period of contraction lasted 

from December 2007 to June 2009. Given that we are using annual data for all analyses, we 

define the Recession period as 2008 to 2009. The Recovery period follows naturally as 2010 to 

2017, which are the most recent years with available data from all data sources. The beginning 

of the Pre-period is more difficult to define. To allow for enough recovery from the brief 

recession in 2001 and to ensure that small business lending was represented close to the preRecession levels we chose 2004 as the starting point for the Pre-period. Therefore, for the 

purposes of this analysis the “Pre-period” covers 2004 to 2007, the “Great Recession” 2008 to 

2009, and the “Recovery” 2010 to 2017. 

To provide context for the discussion, Figure 1 shows the total count of small business loans at 

the national level since 2000, with each of the three time periods shaded. 18 As Figure 1 shows, 

our definitions of Pre-period, Great Recession, and Recovery appear to reflect the data well. At 

the national level, small business lending increased during the Pre-period, fell sharply during 

the Great Recession, and has been slowly rising during the Recovery, but has not returned to 

pre-Recession levels. 

18 This count of small business loans uses the CRA data and the CRA definition of small business previously stated in the Data 

section. 

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FIGURE 1: TOTAL COUNT OF SMALL BUSINESS LOANS ACROSS THE THREE KEY TIME PERIODS: PREPERIOD (2004-2007), GREAT RECESSION (2008-2009), AND RECOVERY (2010-2017) 

To focus the results and discussion on the supply of credit, when possible, we normalize all 

results by a measure of demand. The number of businesses roughly approximates to demand as 

the existence of firms is essential for small business lending. Specifically, “small business 

lending” will be presented as the number of small business loan originations per business. 

Normalizing the data in this way allows for the distinction between counties with few loan 

originations because there are few businesses in the county, and counties with few loan 

originations despite a high number of businesses in the county. There are a number of potential 

drivers of the patterns in small business lending that we identify and discuss in this paper, 

including characteristics of the local economies and the health of credit markets for small 

businesses. This paper focuses only on identifying and presenting patterns, and not on an 

analysis of the drivers of these patterns. 

Our analysis uses number of loan originations to define small business lending as opposed to 

using loan amount. Using loan amount could result in a measure of small business lending that 

varies drastically based on larger dollar loans (up to the $1 million cutoff used to define SBLS in 

the CRA data) to high growth or larger small businesses rather than reflecting the landscape of 

small businesses which total number of originations better represents. Four out of five small 

businesses within the United States are nonemployer, and using originations allows for those 

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businesses to be better reflected in this analysis, as nonemployer businesses, while they are less 

likely to take out small business loans, generally take out smaller loans when they do borrow. 19 

The measure of the number of businesses in each year relies on two measures: the County 

Business Patterns (CBP) and the Nonemployer Statistics (NES), both from the U.S. Census. The 

County Business Patterns counts the number of employer businesses during the week of March 

12th.

20 The Nonemployer Statistics counts the number of nonemployer establishments using 

business income tax records from the IRS. 

21 These two measures are added to produce an 

estimate of the number of total businesses in a county, which acts as a proxy for the small 

business activity and the potential universe for small busineses that could access credit. As a

robustness check, we considered a number of alternative measures to reflect small business 

lending. Figure 2 presents six specific measures we analyzed: total loans, loans per person, loans 

per business, total dollar amount of loans, dollar amount per person and dollar amount per 

business. All results are normalized to 100 percent in 2004. Although the three dollar amount 

measures show more muted patterns during the Pre-period and the Great Recession, all six 

measures show the same general pattern from Figure 1. 

19 For more information on Nonemployer Businesses see SBA Office of Advocacy Fact Sheet 

https://www.sba.gov/sites/default/files/advocacy/Nonemployer-Fact-Sheet.pdf. 

20 For more information on the County Business Patterns see https://www.census.gov/programs-surveys/cbp.html. 

21For more information on the Nonemployer Statistics see https://www.census.gov/programs-surveys/nonemployerstatistics/about.html 

11 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION 
 

 

 

 

 

 

 

 

 

FIGURE 2: VARIOUS MEASURES OF SMALL BUSINESS LENDING ORIGINATIONS, NORMALIZED TO 100% 

IN 2004 

3.2 State-Level Analysis 

To better understand potential patterns underlying the overall change in small business lending, 

we first analyze variation in the small business lending by geography. This analysis will provide 

the foundation for all subsequent analyses and will be referred to throughout the remaining 

sections. 

Figure 3 presents changes in the number of small business loans originated per business per 

year and state for each of the three key periods. 22 The first row presents the average percentage 

change in small business loans originated per business across states. To account for each period 

spanning a different number of years, we focus on an annualized measure of “growth rate per 

year.” The table shows that during the Pre-period, the annual percent change in small business 

22The percentage changes in small business loans across each period were created using the ends from each period. For example, 

the growth in the Pre-period was created by dividing the difference between 2007 and 2004 small business originated loans per 

business by 2004 small business originated loans per business. 

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lending per business averaged 14 percent increase across all states. This contrasts with a much 

larger 32 percent decline during the Great Recession and a small two percent increase during 

the Recovery. 

To further explore variation across states within each period, the middle section of Figure 3

presents the distribution of total percent change in small business lending per business across 

states. For each percentile in the table, the number of states used to construct the percentile 

result will be the same across the three time periods, but the specific states used to construct the 

percentile result will likely differ across the three time periods. For example, the states in the 

10th percentile in terms of growth in the pre-recession period were not the same states that were 

in the 10th percentile in the post-recession period or the recovery period. Since we are focused 

here on the variation of growth rates across states within each period, we use the total percent 

change from the beginning of each period to the end of the period instead of annualized changes 

as in the first row. Presenting the growth rates in this way has the additional benefit of showing 

evidence of the total change in small business lending over each entire period. 

The most notable result here is the significant variation in both the Pre-period and Recovery, 

with much more limited variation during the Recession. For the Pre-period, the distribution of

the total percent change in small business lending per business ranged from 16 percent for the 

lowest decile of states up to 82 percent for the highest decile of states. There is a slightly lower 

but still substantial variation during the Recovery, with a range of -2% for the lowest decile to 

35% for the highest decile of states. These differences contrast with the Great Recession where 

the range from the 10th to the 90th percentile is only ten percentage points. 

Finally, the bottom portion of Figure 3 presents the number and share of states that saw growth 

during each time period. 23 All states except for Mississippi showed growth in the Pre-period,

while 76 percent of states saw growth in small business loans originated per business during the 

Recovery. Figure 5 will delve deeper into the differences in growth rate among different regions 

during the Recovery. 

23 This analysis includes the fifty states and the District of Columbia. 

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FIGURE 3: SUMMARIZING STATE-LEVEL GROWTH IN SMALL BUSINESS LOANS ORIGINATED PER 

BUSINESS ACROSS KEY PERIODS 

Pre-period Recession Recovery 

(2004-2007) (2008-2009) (2010-2017) 

Average Annualized % Growth 14% -32% 2% 

Growth Percentiles: 

Total 

p10 16% -67% -5%

p25 24% -66% -1%

Median 40% -64% 13% 

p75 58% -60% 22% 

p90 82% -58% 34% 

# States with Positive Growth 50 0 37 

% States with Positive Growth 98% 0% 73% 

Figure 4 shows small business lending levels in select states over time with each state’s results 

normalized to 100 in 2004. These states were chosen due to their size and importance in the 

U.S. Economy (New York, Texas, California and Florida), as an outlier state prior to the Great 

Recession (Mississippi), a state in the Great Plains (South Dakota) and a state in the industrial 

Midwest (Michigan). 24 

Corresponding with the trends in Figure 3, there is a large variation in growth rates at the statelevel during the Pre-period, as small business lending per business increased by nearly 100 

percent from 2004 to 2007 in states such as Florida and New York, while there was contraction 

from 2004 to 2007 in Mississippi. 

A trend emerges in the Recovery portion of this graph as normalizing to 2004 lending levels 

shows slight increases in lending during the Recovery, with no substantial differences in lending 

growth rates among the six states. Despite some limited variation, like Figure 3 shows, unlike 

both the Pre-period and the Great Recession, the Recovery period shows limited variation in 

annualized growth of small business loans originated per business across states or time. 

24 Florida, Texas, New York, and California are the four largest state economies in the United States per the Bureau of Economic 

Analysis see: https://www.bea.gov/data/gdp/gdp-state. 

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FIGURE 4: STATE-LEVEL VARIATION IN SMALL BUSINESS LOANS ORIGINATED PER BUSINESS GROWTH 

DURING THE PRE-PERIOD, NORMALIZED TO 100% IN 2004 

Figure 5 maps the growth in small business loans originated per business during the Recovery 

period. The growth is calculated by comparing 2017 and 2009 small business loans originated 

per business and uses the same metrics as Figures 3 and 4. 

There is a clear regional trend—where states in the Great Plains and in the West have recovered 

at a much slower rate than the median state (total growth of 13 percent per Figure 3). This 

contrasts with the Eastern Seaboard and Southern states like Georgia, Florida, and Arkansas, 

where SBL rebounded at a higher rate since the Great Recession. Further research is needed to 

determine if these regional differences are based on an urban-rural divide, industry 

composition, or other characteristics. 

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FIGURE 5: PERCENTAGE GROWTH SMALL BUSINESS LOANS ORIGINATED PER BUSINESS DURING THE 

RECOVERY (2010-2017) 25 

3.3 County-Level Analysis 

Like Figure 3 with the state-level analysis, Figure 6 presents the number of small business loans 

originated per business per year and county for each of the three key periods. The first row 

presents the average percentage change in small business loans originated per business across 

counties. To account for each period spanning a different number of years, we focus on an 

annualized measure of “growth rate per year.” During the Pre-period, the annual percent change 

in small business loans originated per business averaged 10 percent across all counties. This 

25 Additional maps were generated using the same measures: small business loans per business for the pre-period and the Great 

Recession. These maps can be found in Appendix C. Please note that the gradient style is the same, the scale changes based on 

the time period. 

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contrasts with a much higher 32 percent decline during the Great Recession and a small three 

percent increase during the Recovery. 26 

To explore variation across counties within each period, the middle section of Figure 6 presents 

the distribution of total percent change in small business lending per business across counties. 

As for the state-level analyses, these results use total percent change rather than annualized 

percent change for each period. The most notable result here is the significant variation in both 

the Pre-period and Recovery, with much more limited variation during the Great Recession. For 

the Pre-period, the distribution of the total percent change in small business lending per 

business ranged from negative six percent for the lowest decile of counties up to 64 percent for 

the highest decile of counties, with a similar distribution for the Recovery. This finding 

contrasts with the Great Recession where the range from the 10th to the 90th percentile is only 20 

percentage points. The variation in all of these buckets is greater than the variation among 

states, which indicates the greater heterogeneity in small business lending between counties 

than among states. 

Finally, the bottom portion of Figure 6 presents the number and share of counties that saw 

positive growth during each time period. As expected, a high percentage of counties showed 

lending growth in the Pre-period, and a high, but slightly lower percentage of counties showed 

lending growth in the Recovery. Strikingly, only one county, Owsley County in Kentucky, 

showed positive lending growth during the Great Recession, highlighting the severity of this 

time period. 27 

26 The county- and state-level averages show differences, because we do not weight either set of results by respective population 

sizes. 

27 Owlsey County is a small, poor county in Kentucky with their largest industries in Health Care & Social and Education. Owsley 

County is an outlier, as the number of loans increased from 5 loans in 2007 to 8 loans in 2009. For more information, see: 

https://datausa.io/profile/geo/owsley-county-ky/. 

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FIGURE 6: SUMMARIZING COUNTY-LEVEL GROWTH IN SMALL BUSINESS LOANS ORIGINATED PER 

BUSINESS ACROSS KEY PERIODS 

Pre-period Recession Recovery 

(2004-2007) (2008-2009) (2010-2017) 

Average Annualized % Growth 10% -32% 3% 

Growth Percentiles: 

Total 

p10 -6% -74% -20%

p25 12% -70% -5%

Median 28% -65% 12% 

p75 47% -59% 34% 

p90 64% -54% 62% 

# Counties with Positive Growth 2,700 1 2,128 

% Counties with Positive Growth 86% 0% 68% 

Figure 7 presents the relationship between counties’ annualized rates of growth in small 

business loans originated per business during the Pre-period and the Great Recession. The 

horizontal axis represents annual growth in small business lending during the Pre-period while 

the vertical axis represents annual growth during the Great Recession. Two points are evident. 

First, there is essentially no relationship between counties’ Pre-period and Great Recession 

growth rates. Second, the distribution of points (counties) highlights the substantially larger 

variation in Pre-period growth rates compared to the Recession. In total, although some 

counties gained much more than others during the Pre-period, the Great Recession was nearuniformly harmful across the country for local small business lending. 

18 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION 
 

 

 

 

 

 

 

FIGURE 7: COMPARING COUNTIES’ ANNUALIZED SMALL BUSINESS LOANS ORIGINATED PER BUSINESS 

PERCENT GROWTH RATES DURING THE PRE-PERIOD (2004-2007) AND RECESSION (2008-

2009) * 

* Values outside the plot range are reduced to 50 percent. 

Figure 8 presents the relationship between counties’ Great Recession and Recovery annualized 

rates of growth in small business loans originated per business. The horizontal axis represents 

annual growth in small business lending during the Recovery while the vertical axis represents 

annual growth during the Great Recession. Unlike Figure 7 above that showed no relationship 

between the Pre-period and Recession periods, here there is a reasonably strong relationship 

between growth during the Great Recession and Recovery periods. The general negative slope 

of the data points suggests that counties that fared the worst during the Great Recession tend to 

be recovering at faster rates. However, there are still many counties experiencing negative 

growth during the Recovery, regardless of their experience during the Great Recession. 

19 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION 
 

 

 

 

 

 

 

 

 

 

FIGURE 8: COMPARING ANNUALIZED SMALL BUSINESS LOANS ORIGINATED PER BUSINESS PERCENT 

GROWTH BETWEEN THE GREAT RECESSION (2008-2009) AND RECOVERY (2010-2017) * 

* Values outside the plot range are reduced to 50 percent. 

As shown in Figure 6, 71 percent of counties had positive small business lending growth during 

the Recovery, implying that 29 percent of counties had negative or neutral small business 

lending growth. Figure 9 shows a histogram of each county’s 2017 small business lending 

relative to 2004 levels. As of 2017, only 28 counties have returned or surpassed their 2004 

small business lending levels. 28 The median county has only recovered to roughly half (51%) of 

2004 lending levels. 

28 Among the 28 counties that rebounded or surpassed their 2004 SBL per business levels, 6 of them were rural counties in Texas 

and 6 were in Arkansas. One notable inclusion was Kings County in New York City which encompasses the borough of Brooklyn, 

which grew 14% in comparison to their 2004 SBL per business. 

20 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION 
 

 

 

 

 

 

 

 

 

FIGURE 9: COUNTIES’ 2017 NUMBER OF SMALL BUSINESS LOANS ORIGINATED PER BUSINESS, 

EXPRESSED AS A PROPORTION OF BASELINE 2004 LEVELS* 

* Values outside the plot range are reduced to 150 percent

3.4 Counties Segmented by Growth Quintile 

To further understand the micro-level patterns in small business lending during the Pre-period, 

Great Recession, and Recovery, Figures 10, 11, and 12 present median values of population, rural 

status, household income, poverty rate, and college graduation rates for counties in each quintile 

of the distribution of annual growth during the Pre-period, Great Recession, and Recovery in 

small business loans originated per business. 29 Each of these quintiles is dynamic and the 

composition of the counties changes based on the growth rate of the county during each distinct 

time period. These time periods are the same as previous graphics: Pre-period (2004-2007), 

Great Recession (2008-2009), and Recovery (2010-2017). In addition, the county-level results 

in the figures are not weighted by county population size, so small counties are given the same 

29 Rural status is defined using the CFPB list of rural counties https://www.consumerfinance.gov/policycompliance/guidance/rural-and-underserved-counties-list/. Quintile refers to counties grouped into five equal groups based on 

the annual growth of small business loans per business. Household income and poverty rates are defined by Small Area Income 

and Poverty Estimates (SAIPE), a survey of counties and states conducted by the US Census. Household income refers to the 

median household income of the county. 

21 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

weight as large counties. This leads to estimates that are generally higher than national averages 

for poverty and rural rates and generally lower for population, income and graduation rates. 

As an example of how to interpret Figure 10, for the counties in the lowest quintile of annualized 

growth in small business loans originated per business in 2007 the median population was 

17,297, the median household income was $37,259, and the median college graduation rate was 

14.8 percent. All these values refer to those at the end of the period. The values at the top of the 

graph represent the range of percentages for the growth in small business loans originated per 

business in each quintile. The trends in Figure 10 are very clear; counties with the lowest 

annualized growth in small business loans originated per business were much smaller and more 

rural, with lower household incomes and college graduation rates, and higher poverty rates. 

Figure 11, covering the Great Recession, should be interpreted in the same way as Figure 10 

above. Unlike for the Pre-period where each of these measures showed a monotonic 

relationship with annual growth in small business loans originated per business, some of these 

measures show a U- or inverted U-shaped pattern here, especially for population size and rural 

percentage. As an example, counties in the lowest quintile of annualized growth in small 

business loans originated per business, i.e. showing the largest percentage decline, were the 

smallest counties by population, with a median of just over 14,000. Median county population 

sizes increased for counties in quintiles 2 and 3, but then declined for quintiles 4 and 5. 

Comparing quintiles 1 and 5, these results suggest that within small, rural counties with low 

household incomes, high poverty rates, and low college graduation rates, there is a subset that 

experienced a high decline in annual growth of small business loans originated per business and 

a separate subset that experienced a slightly lower decline. 

Figure 12, covering the Recovery, should be interpreted the same way as Figures 10 and 11. The 

U- or inverted U-shaped relationships for population and rural percentage found during the

Great Recession again appear for the Recovery. The fifth quintile is poorer, less educated, and a

lower income than the other quintiles, which is different from the pre-recession period. Within

small, rural counties with low household incomes, high poverty rates and low college graduation

rates, there is a subset that experienced a higher decline in annual growth of small business

loans originated per business and a separate subset that experienced a higher increase.

Additional analysis is needed to identify what is driving these differences in lending across

quintile.

22 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION 
 

FIGURE 10: CHARACTERISTICS OF COUNTIES SEGMENTED BY GROWTH QUINTILE DURING THE PRE -

PERIOD (2004-2007) 

23 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION 
 

 

 

FIGURE 11: CHARACTERISTICS OF COUNTIES SEGMENTED BY GROWTH QUINTILE DURING THE GREAT 

RECESSION (2008-2009) 

24 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION 
 

 

 

 

FIGURE 12: CHARACTERISTICS OF COUNTIES SEGMENTED BY GROWTH QUINTILE DURING THE 

RECOVERY (2010-2017) 

25 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4. Small business lenders

In order to characterize the small business lending market during the Great Recession, it is also 

important to understand the entities supplying credit during that time.

30 The total number of 

depository financial institutions in the U.S. has been steadily declining for many years. Figure 

13 shows the total number of unique financial institutions by type over time. The number of all 

types of Depository Institutions (credit unions, community banks, thrifts, and large banks) has 

shrunk by 41 percent since 2000.

31 (This report classifies banks into “large” or “community” 

based on the FDIC’s definition of a community bank in coming up with these figures). 32 This 

downward trend in number of institutions has been consistent during the entire period, other 

than a slight increase and then decline for large banks from 2007-2009.

33 

30 For more information on small business lenders specific to banks see the FDIC Small Business Lending Survey available at 

https://www.fdic.gov/bank/historical/sbls/full-survey.pdf. 

31 This is a part of a larger trend of the number of banks declining since the Savings and Loans Crisis, See Miller, Stephen Matteo, et 

al. "On the Historical Rise and (Recent) Decline in the Number of Banks." George Mason: Mercatus Center, 18 June 2019, 

www.mercatus.org/bridge/commentary/historical-rise-and-recent-decline-number-banks. 

32 See Chapter 1 of the FDIC’s Community Bank Study (https://www.fdic.gov/regulations/resources/cbi/study.html) for a thorough 

description of their definition of a Community Bank, and the corresponding Community Bank Initiative dataset for the 

Community Bank flag. This definition uses percent of assets held in specialty bank charters, loan-to-assets, core deposits-toassets, number of total banking offices, level of deposits for any one office, location-based criteria, and asset-size limits. 

33 An important note for the raw number of institutions offering small business loans is the consolidation among banks. Voluntary 

mergers have accelerated since the Great Recession among banks with most of those mergers among community banks. 

Voluntary mergers signify those entered into freely by both parties, while an involuntary merger signifies those forced by 

regulators or a dire financial situation to merge. An expanded discussion about voluntary mergers can be found in Kowalik, 

Michal, et al. "Bank Consolidation and Merger Activity Following the Crisis." Federal Reserve Bank of Kansas City Economic 

Review, pp. 31-49. 

26 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION 
 

 

 

 

 

 

 

 

 

 

 

 

 

FIGURE 13: NUMBER OF DEPOSITORY INSTITUTIONS BY INSTITUTION TYPE 

A segment of the SBL market growing in importance is the Fintech market. 34 Estimates by S&P 

found that five large Fintech lenders (OnDeck, Kabbage, Credibly, Square Capital and PayPal 

Working Capital) that focus on Small and Medium Enterprise (SME) businesses originated $6.5 

billion of loans in 2017, and the report found year-over-year increases of SME lending by these 

Fintech lenders since 2014. 35 A white paper produced by the Bureau in 2017 estimated the small 

business lending market was $1.4 trillion outstanding, indicating that Fintech lending only 

refers to a part of the SBL marketplace. 36 An annual survey by the Federal Reserve of employer 

34 Financial technology, which is commonly referred to as FinTech, refers to the application of technological products, services, and 

other solutions into traditional consumer and commercial finance. Firms that predominately leverage innovative technologies to 

provide financial services to businesses and consumers can be considered Fintech lenders. 

35 Dixit, Nimayi. "2018 US Digital Lending Market Report." S&P Global Market Intelligence, 2018, p. 9 available at 

http://marketplacelendingassociation.org/wp-content/uploads/2018/11/SP-2018-US-Digital-Lending-Mkt-Report.pdf. 

36 See Figure 2 of the CFPB White Paper. "Key dimensions of the small business lending landscape." 10 May 2017, 

https://files.consumerfinance.gov/f/documents/201705_cfpb_Key-Dimensions-Small-Business-Lending-Landscape.pdf 

27 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

small businesses found a growing number of small businesses apply to online lenders when 

seeking credit—rising from 19 percent in 2016 to 32 percent in 2018, indicating the increasing 

importance of the online market. 37 

Figure 14 shows for each type of institution the share of lenders that offer small business loans. 

For community banks, large banks and credit unions, the number of institutions that offer small 

business products is divided by the total number of institutions and plotted yearly. Since 

relevant data for thrifts are only available after 2012, the share of thrifts that offer small 

business lending products is calculated from 2012 on. The Total line represents the share of all 

institutions that are small business lenders – note that it jumps at 2012 once thrifts are included 

in the calculation. 

Most notable in Figure 14 is the variation across institution type in the percentage of institutions 

that offer small business products. Consistent with the literature on the role of community 

banks in small business lending, nearly all community banks offer small business products. 

This finding contrasts with credit unions where less than 21 percent of all credit unions offer 

small business products in each year. Nonetheless, the share of credit unions that offer small 

business products has been growing over time. 

37 See "Small Business Credit Survey: 2019 Report on Employer Firms", 2019, page ii available at 

www.fedsmallbusiness.org/medialibrary/fedsmallbusiness/files/2019/sbcs-employer-firms-report.pdf. Within this report online 

lenders encapsulate a wide variety of nonbank online-based sources “including retail/payments processors, peer-to-peer lenders, 

merchant cash advance lenders, and direct lenders”. 

28 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION 
 

 

 

 

 

FIGURE 14: SHARE OF LENDERS OFFERING SMALL BUSINESS LOANS OVER TIME BY INSTITUTION TYPE 

Figure 14 presents the shares of existing institutions that offer small business products but does 

not reflect the absolute number of such depository institutions that are in operation or those 

that offer small business credit. Figure 15 presents the number of each institution type that offer 

these products for the institutions that we are analyzing. All results are normalized to 100 in 

2004. Thrifts are broken out separately and not further broken out by whether they provide 

small business lending products, because information on small business lending was taken from 

Call Reports, and thrifts reported Call Report data only from 2012 through 2017. Prior to 2012, 

thrifts reported thrift Financial Reports, which are not available electronically. 

29 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION 
 

 

 

 

 

 

 

 

 

 

FIGURE 15: NUMBER OF FINANCIAL INSTITUTIONS BY INSTITUTION TYPE AND SMALL BUSINESS 

LENDING STATUS, NORMALIZED TO 100% IN 2004 

Figure 15 shows the decline in the number of financial institutions over recent years. Other than 

credit unions that offer small business lending products, the number of each institution type 

declined by at least 25 percent between 2004 and 2017. Figure 15 shows the significant 

variation across institution types. As noted, the number of credit unions offering small business 

lending products has increased by over 40 percent since 2004. According to Figures 13 and 14, 

this increase is a result of more existing credit unions making Small Business loans, rather than 

new credit union entrants into the market. In addition, for the remaining institution types that 

showed declines, the number of community banks and large banks that offer small business 

products declined less than community banks and large banks that did not offer small business 

lending products. 

Although bank lending to small businesses has contracted considerably, research commissioned 

by the SBA Office of Advocacy and conducted by researchers at the University of CaliforniaBerkeley found that small business lending among credit unions partially offset the fluctuations 

30 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION 
 

 

 

 

 

 

 

 

 

 

 

 

 

in bank lending to small businesses. 38 This impact is limited, as there is a lending cap on credit 

unions for Member Business Loans at 12.25 percent of Total Assets. 

39 

Not all depository institutions in the U.S. offer small business lending products. It is important 

to note that the characterization of “small business lender” used in the preceding analyses is 

quite basic, and only considers whether the institution does any small business lending at all. A 

more holistic picture of how each institution type participates in the small business lending 

market could include information about loan volumes, product availability, or geography of

lending. None of this analysis includes small banks that do not report under the call report, 

non-depository institutions including FinTech’s, and other potential sources of Small Business 

Credit. Data limitations make analysis in this vein difficult and such an analysis is not the focus 

of this report. Therefore, this analysis alone is insufficient to draw any conclusions about how 

well these types of institutions meet the credit needs of small businesses. Nonetheless, this 

analysis is informative in its breakdown of the evolution of these Financial Institutions on the 

dimension of time and offering SBL products. 

38 Wilcox, James A. “The Increasing Importance of Credit Unions in Small Business Lending.” Prepared for the SBA Office of 

Advocacy. Sept. 2011. This report measured small business lending at the dollar level and found that increases in SBL dollars at 

credit unions accounted for $.07 of the fluctuation in SBL at the bank-level. 

39 Please see page 78 within this final rule from the NATIONAL CREDIT UNION ADMINISTRATION (NCUA). "12 CFR Part 723." 

18 Feb. 2016, www.ncua.gov/files/agenda-items/AG20160218Item2b.pdf. 

31 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION 
 

 

 

 

 

 

 

 

 

 

 

 

5. Conclusion

Small business lending was significantly affected by the Great Recession. Applying various 

measures of the Great Recession and Recovery to local geographies reveals that in many 

communities, their small business lending in 2017 still has not returned to pre-Recession 

levels. 40 

At both the state and county geographies, there was significantly more variation in the growth in 

SBL during the pre-period than either decline during the recession or the growth during the 

recovery. At a state-level there was some evident regional variation during the Recovery period, 

with states on the East Coast rebounding at a higher rate than states in the Great Plains or the 

West. 

At the county-level, a typical county returned to roughly half of 2004 lending levels by 2017. 

While there was considerable variation in growth rates during the pre-period, small business 

lending growth was relatively stagnant during the Recovery period (2010-2017). Only one 

county had growth during the Great Recession, indicating how widespread the crisis was. 

Looking at lenders, the number of all types of institutions (thrifts, community banks, credit 

unions, and large banks) have declined since 2004. In terms of the share of institutions that 

offer SBL products, the share of credit unions offering SBL has doubled since 2004 (10% to 

20%), while the share of large banks and community banks offering SBL has remained relatively 

stable. 

Further research could analyze the varying levels of small business lending before, during, and 

after the Great Recession. Research into whether this geographic variation in the recovery of 

Small Business Lending is driven by state fiscal policies, industry composition, or other relevant 

factors remains important. Given the importance of community development and the role that 

small businesses play in this development, it is important to understand the experiences of these 

communities during the periods around the Great Recession. 

40 The reasons for the Recovery ending in 2017 is as a result of data limitations CBP measures are currently only available until 

2017. 

32 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION 
 

 

Appendix A: Data Sources

Dataset 

American Community Survey 

(5-Year) 

Publisher 

Census 

Year(s) 

2007, 2010, 2017 

Figures Used 

10, 11, 12 

County Business Patterns Census 2004-2017 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 

12 

Census Population and 

Housing Unit Estimates Census 2004-2017 2, 10, 11, 12 

Community Reinvestment Act 

Disclosure Data FFIEC 2000-2017 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 

11, 12 

Historical Community Banking 

Reference Data FDIC 2000-2017 13, 14, 15 

Bank and Thrift Call Report FFIEC 2000-2017 13, 14, 15 

Local Area Unemployment 

Statistics BLS 2007, 2010, 2017 10, 11, 12 

Credit Union Call Report NCUA 2000-2017 13, 14, 15 

Non-employer Statistics Census 2004-2017 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 

12 

Rural Counties List CFPB 2016 10, 11, 12 

Small Area Income and Poverty 

Estimates Census 2007, 2010, 2017 10, 11, 12 

Summary of Deposits FDIC 2000-2017 13, 14, 15 

33 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION 
 

 

 

 

 

 

 

 

 

 

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economic-trends/et-20120522-measuring-small-business-employment-over-the-businesscycle.aspx. 

Burgen, Emily and Tasci, Murat. “Job Creation by Small and Large Firms over the Business 

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Chen, Brian S., et al. "The Decline of Big-Bank Lending to Small Business: Dynamic Impacts on 

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36 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION 
 

Appendix C: Additional Figures

FIGURE 16: PERCENTAGE GROWTH IN SMALL BUSINESS LOANS PER BUSINESS DURING THE PREPERIOD (2004-2007) 

37 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION 
 

FIGURE 17: PERCENTAGE GROWTH IN SMALL BUSINESS LOANS ORIGINATED PER BUSINESS DURING 

THE RECESSION (2008-2009) 

38 DATA POINT: SMALL BUSINESS LENDING AND THE GREAT RECESSION