2018

FDIC Small Business 

Lending Survey

FEDERAL DEPOSIT INSURANCE CORPORATION

 Small Business Lending Survey i

ACKNOWLEDGMENTS

The insights from the Small Business Lending 

Survey (SBLS) are a result of the contributions of 

a large number of U.S. banks. In particular, the 

Federal Deposit Insurance Corporation (FDIC) 

sincerely thanks the approximately 1,200 banks that 

responded to the survey. Without their invaluable 

participation, it would not have been possible to 

provide a nationally representative picture of banks’ 

small business lending practices, or to compare the 

experiences of different-sized banks. 

In addition, 40 banks across the U.S. participated in 

interviews with FDIC staff, helping ensure that the 

questions asked by the SBLS were understandable, 

answerable, and relevant to the banking industry. 

These conversations were necessary because the 

SBLS was specifically designed to cover topics not 

already addressed by other data sources. Another 

11 banks were visited to test the functionality of the 

web interface used to collect survey responses. The 

FDIC thanks these 51 banks for giving generously of 

their time and expertise to the development of the 

final survey questionnaire.

Multiple divisions of the FDIC collaborated to 

complete this study. Staff from the FDIC’s Division of 

Insurance and Research (DIR) led and coordinated 

the survey development, implementation, analysis, 

and writing. The primary authors of the report are 

DIR staff Jacob Goldston, Yan Y. Lee, and Smith 

Williams. Valuable research and analytical support 

were provided by DIR staff Claire Brennecke, Alexis 

Ercolino, Isabella Jaeger, Maria Hussain, Chet Polson, 

Benjamin Rodriguez, and Jeffery Traczynski. Karyen 

Chu of the Division of Depositor and Consumer 

Protection (DCP) and Jack Reidhill (DIR) provided 

invaluable insight and guidance throughout all phases 

of the project. Kris Rengert from DCP and Rae-Ann 

Miller and Suzy S. Gardner from the Division of Risk 

Management Supervision contributed to the survey 

development phase. A number of senior officials and 

staff provided helpful comments and suggestions on 

drafts of the report; from DIR, Fred Carns, Richard 

Brown, Phillip Shively, Rosalind Bennett, Stefan 

Jacewitz, and Jonathan Pogach, and from DCP, 

Keith Ernst. 

Neeta Allagh and Donna Vogel from DIR very ably 

guided us through the publication process. Heather 

Woods, from the FDIC’s Graphic Design and Printing 

Unit, prepared the report for publication and provided 

design support. Our external editor Jane Lewin very 

thoroughly edited the text of this report.

Finally, we thank staff at the U.S. Census Bureau, 

which the FDIC contracted to assist in developing 

the survey, build the web interface, conduct the 

data collection, and protect respondent identities 

from disclosure.

Diane Ellis

Director, Division of Insurance and Research
ii FEDERAL DEPOSIT INSURANCE CORPORATION

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 Small Business Lending Survey iii

CONTENTS

Acknowledgments ................................................................................................................................... i

List of Tables and Figures....................................................................................................................... v

Executive Summary................................................................................................................................ 1

Section 1. Introduction ........................................................................................................................... 5

Section 2. Defining and Measuring Small Business Lending............................................................ 9

2.1 Defining Small Business Borrowers: Banks’ Approaches..................................................................................9

2.2 Measuring Small Business Lending (I): Loans That Exceed the Proxy Limit.............................................13

2.3 Measuring Small Business Lending (II): Loans by Banks That Specialize Their C&I Loans to 

Small Businesses .....................................................................................................................................................13

2.4 Measuring Small Business Lending (III): Loans Secured by Residential Mortgages ................................15

2.5 Extrapolating a Lower Bound on the Proxy’s Understatement of Small Business Loans.......................... 17

2.6 Conclusions.............................................................................................................................................................. 18

Section 3. Markets and Competition.................................................................................................. 21

3.1 What Is Your Bank’s Geographic Market for Loans to Small Businesses?...................................................21

3.2 Where Can a Small Business Apply for a Loan from Your Bank?.................................................................23

3.3 Who Are Your Bank’s Competitors? ..................................................................................................................24

3.4 Conclusions..............................................................................................................................................................28

Section 4. Competitive Practices and Advantages .......................................................................... 29

4.1 How Does Your Bank Maintain and Generate Relationships with Small Businesses?..............................29

4.2 What Are the Competitive Advantages of Your Bank and of Your Number One Competitor?.............. 31

4.3 Conclusions..............................................................................................................................................................35

Section 5. Loan Products and Underwriting Practices .................................................................... 37

5.1 What Loan Products Does Your Bank Offer to Small Businesses? ..............................................................37

5.2 For What Purposes Do Small Businesses Use These Products? ...................................................................39

5.3 Which Underwriting Criteria Are Used by Your Bank to Evaluate Small Business Borrowers?.............40

5.4 What Collateral Does Your Bank Accept from Small Businesses?................................................................40

5.5 When Is Your Bank Willing to Make an Underwriting Exception for a Small Business? .......................43

5.6 Does Your Bank Require Minimum Loan Amounts and Use Standardized Loan Products?.................43

5.7 Does Your Bank Lend to Start-Ups, and if so, Do You Underwrite the Loans Differently from 

Loans for Established Small Businesses?............................................................................................................45

5.8 Conclusions..............................................................................................................................................................47

References ............................................................................................................................................. 49
iv FEDERAL DEPOSIT INSURANCE CORPORATION

Contents

Appendix A. Survey Methodology...................................................................................................... 53

A.1 Sample Selection .....................................................................................................................................................53

A.2 Survey Response Rate ............................................................................................................................................54

A.3 Item Response Rate.................................................................................................................................................57

A.4Analysis and Statistical Precision.........................................................................................................................60

Appendix B. Extrapolated Outstanding C&I Lending to Small Businesses.................................. 61

B.1 Extrapolated C&I Lending to Small Businesses Originated at Amounts Greater Than $1 Million, 

by Banks with Assets of $1 Billion to Less Than $10 Billion...........................................................................61

B.2 Extrapolated C&I Lending to Small Businesses Originated at Amounts Greater Than $1 Million, 

by Banks with Assets Below $1 Billion ...............................................................................................................62

B.3 Extrapolated C&I Lending Collateralized by 1-4 Family Residences...........................................................62

Appendix C. Small Business Lending Survey ................................................................................... 65
 Small Business Lending Survey v

LIST OF TABLES AND FIGURES

Figure 2.1: Percentage of Banks That Reference These Characteristics When Describing 

Small Business Borrowers................................................................................................................................. 12

Figure 2.2: Percentage of Banks That Use a Maximum Allowable Limit for Either of These 

Financial Measures to Define Small Business Lending............................................................................... 12

Figure 2.3: Percentage of Banks That Use These Limits to Define Small Business Lending ....................................14

Figure 2.4: Percentage of Total Outstanding C&I Loans of $1 Million or More at Origination, by Borrower’s 

Gross Annual Revenue, 2015 Q4 (Banks with $1 Billion to Less Than $10 Billion in Assets)..............14

Figure 2.5: Percentage of Banks That Make “Largely All” of Their C&I Loans to Small Businesses...................... 15

Figure 2.6: Percentage of Total C&I Originations Secured by 1- to 4-Family Residential Properties......................16

Table 2.1: Dollar Amount Understatement of Call Report Proxy for Small Business Lending, 2015 

(Extrapolated Lower Bound).............................................................................................................................18

Figure 3.1: Percentage of Banks That Use This Geographic Level as Their Trade Area for 

Small Business Lending..................................................................................................................................... 22

Figure 3.2: Percentage of Banks That Allow Small Business Borrowers to Apply for Loans 

Using This Method............................................................................................................................................. 23

Figure 3.3: Percentage of Banks That Consider This Institution a Competitor for Small Business Lending........ 26

Figure 3.4: Percentage of Banks That Consider Credit Unions to Be a Top Three Competitor for 

Small Business Lending (Small Banks Only)................................................................................................. 27

Figure 4.1: Percentage of Banks That Use This Practice to Generate New and Maintain Existing 

Small Business Lending Relationships............................................................................................................ 30

Figure 4.2: Percentage of Banks That Consider Themselves to Have a Top Three Competitive 

Advantage in This Category ............................................................................................................................. 32

Table 4.1: Percentage of Banks That Consider This Competitive Advantage One of Their Own 

Top Three............................................................................................................................................................. 32

Table 4.2: Percentage of Banks That Consider This Competitive Advantage One of Their Number 

One Competitor’s Top Three............................................................................................................................ 34

Figure 4.3: Percentage of Banks That Consider Their Number One Competitor to Have a Top 

Three Competitive Advantage in This Category.......................................................................................... 34

Figure 5.1: Percentage of Banks That Offer This Loan Product to Small Businesses................................................ 38

Figure 5.2: Percentage of Banks That Cite This as the Purpose for Which Their Number One Loan 

Product to Small Businesses Was Used (All Banks Combined) ................................................................ 39
vi FEDERAL DEPOSIT INSURANCE CORPORATION

List of Tables and Figures

Figure 5.3: Percentage of Banks That “Always” or “Almost Always” Use This Underwriting Criterion to Evaluate 

Small Business Loan Applicants for Their Number One Loan Product to Small Businesses.............. 41

Figure 5.4: Percentage of Banks That Commonly Accept This Collateral for Their Number One 

Loan Product to Small Businesses................................................................................................................... 42

Figure 5.5: Percentage of Banks That Cite This as a Typical Reason to Make Exceptions to Loan Policy 

for Their Number One Loan Product to Small Businesses......................................................................... 42

Figure 5.6: Percentage of Banks That Require a Minimum Loan Amount for Their Number One 

Loan Product to Small Businesses................................................................................................................... 44

Figure 5.7: Percentage of Banks That Use Standardized Small Business Loan Products.......................................... 44

Figure 5.8: Percentage of Banks That Make C&I Loans to Start-Up Small Businesses............................................. 46

Figure 5.9: Percentage of Banks That Underwrite Start-Up Small Businesses Differently from 

Established Small Businesses, Using a Practice in This Category ............................................................. 46

Table A.1: Frame and Initial Sample, by Stratum............................................................................................................ 54

Table A.2: Mean Values for Sample and Respondent Banks, by Stratum.................................................................... 55

Figure A.1: Response Rates, by Survey Question............................................................................................................... 58

Table A.3: Response Rates, by Survey Question and Stratum....................................................................................... 59

Table B.1: Extrapolated Lower Bound, C&I Lending to Small Businesses Originated at Amounts 

Greater Than $1 Million.....................................................................................................................................61

Table B.2: Extrapolated Lower Bound, C&I Lending Collateralized by 1-4 Family Residences............................. 63
 Small Business Lending Survey 1

EXECUTIVE SUMMARY

The survival and growth of small businesses depends 

on access to credit, and banks are the most common 

source of external credit for small firms. Nonetheless, 

very little comprehensive information is available 

about how small business lending is conducted by 

banks. Given the current consolidation trend in U.S. 

banking, it is essential to understand the practices 

that banks use to meet the needs of small businesses, 

and how these practices differ between banks of 

different sizes. In particular, the continued decline 

in the number of small banks and of bank branches 

(for banks of all sizes) may have significant negative 

effects on U.S. small businesses. 

To fill this information gap, the Federal Deposit 

Insurance Corporation (FDIC) conducted the 

nationally representative Small Business Lending 

Survey (SBLS). High-quality data on the small 

business lending practices of U.S. banks were 

collected in 2016 and 2017. Approximately 1,200 

banks responded to the survey—over one-sixth 

of all banks in the nation—yielding a 60 percent 

survey sample response rate. The survey design 

allows researchers to make inferences about the 

U.S. banking industry as a whole, as well as to draw 

distinctions between small and large banks. 

At present, few surveys of bank small business 

lending exist, and none covers the range of topics 

captured by the SBLS. Further, most existing 

surveys cover only small banks and do not allow for 

comparisons between small and large banks, as the 

SBLS does. (This report defines banks with less than 

$10 billion in assets as small, and banks with at least 

$10 billion in assets as large.)

The SBLS collected information on banks’ entire 

volume of commercial and industrial (C&I) lending 

by firm size and by residential real estate collateral, 

which enables the FDIC to provide direct evidence 

that small business lending by banks is currently 

understated. The findings of the survey show that 

the best available proxy for small business C&I 

lending substantially understates the amount of 

lending extended by banks to small businesses, 

especially by small banks.

In addition, the data collected by the SBLS confirm 

that small banks are indeed more likely to rely on 

relationship lending practices, while large banks are 

more likely to use transactional methods. Yet the 

results reveal that small business lending at all banks, 

regardless of bank size, is characterized by a core set 

of practices centering on local personal interactions. 

Thus, the survey’s unique combination of findings 

provides depth and nuance to the current knowledge 

of small business lending. 

The following detailed results support the 

conclusions of this report.

Banks Lend More to Small Businesses 

Than Is Currently Measured

The C&I Loan-Size Proxy Understates Lending in at 

Least Two Ways

§ The best available measure of small business 

lending is a proxy based on loan size, but many 

loans made to small businesses are above the 

loan-size limit used ($1 million). For banks with 

between $1 billion and $10 billion in assets, over 

a fifth of their C&I lending above $1 million 

was made to businesses with under $1 million in 

revenue.

§ The proxy also fails to capture small business 

lending secured by residential real estate. Yet 6 

percent of lending by small banks for commercial 

and industrial purposes was secured by 1- to 

4-family residential properties.

Conservative Extrapolations Show Substantial 

Understatement of Lending

§ In 2015, small business C&I lending in the U.S. 

banking industry was understated by at least 12 

percent ($37 billion). 

§ Small business C&I lending by small banks was 

understated by at least 29 percent.
2 FEDERAL DEPOSIT INSURANCE CORPORATION

Executive Summary

A Core Set of Small Business Lending 

Practices Are Used By Banks of All Sizes 

Relationships Are Important

§ Both small and large banks most frequently cite 

relationships and personal attention as their top 

competitive advantages. 

§ Large majorities of both small and large banks 

are typically willing to grant exceptions to their 

underwriting policies based on existing loan and 

depositor relationships.

Practices Are High-Touch and Staff-Intensive

§ Majorities of both small and large banks 

use high-touch, staff-intensive practices to 

maintain and generate small business lending 

relationships, and customer referrals are a focus 

for both sizes of banks. 

§ Small banks are more likely to focus on 

community involvement and personal attention, 

while large banks focus more on professional 

referrals and their own branch network.

Small Business Lending Primarily Occurs Locally 

§ A large majority of small banks define their 

small business lending trade areas locally, as do a 

substantial share of large banks.

§ Almost all banks accept applications at branches; 

both sizes, but especially large banks, also 

accept applications during staff visits and over 

telephone calls.

§ Very few small or large banks accept small 

business loan applications online.

Competition Is Focused on Local Banks 

§ Banks typically view a local bank of similar size 

as their most important competitor.

§ Local banks of other sizes are also often 

considered to be frequent competitors, but 

nonlocal banks are rarely viewed as such. 

§ Credit unions and FinTech firms are emerging as 

competitors, but are not currently top competitors.

The Same Products and Underwriting Criteria are 

Generally Used

§ The majority of both small and large banks offer 

a similar set of loan products, including lines of 

credit, letters of credit, and term loans.

§ Small and large banks largely use similar 

underwriting criteria.

§ Small and large banks typically accept the same 

types of collateral.

Small Banks are Relationship Lenders, 

Competitive in the Small Business 

Lending Market

Small Banks Are More Flexible in Characterizing 

Small Businesses and Engaging with Start-Ups

§ Small banks use a diverse array of concepts 

to describe their small business customers, 

including qualitative attributes such as owner 

characteristics (e.g., “wears many hats”) and 

localness of the business (e.g., “involved in 

community”).

§ Small banks evaluate a wide variety of additional 

criteria to qualify start-ups for loans, including 

evaluating owner characteristics (e.g., “education” 

or “experience in industry”).

Small Banks Are Perceived As Relational, Attentive, 

and Fast

§ Small banks are more than three times as likely 

as large banks to be considered by competitors as 

having advantages in customer service.

§ Small banks are almost four times as likely as 

large banks to be considered by competitors as 

being faster at making loans.
 Small Business Lending Survey 3

Executive Summary

Local Small Banks Are Considered Top Competitors 

by Banks of Both Sizes 

§ Majorities of both small and large banks consider 

a local small bank with $1 to $10 billion in assets 

as one of their top three competitors, and about 

one-fifth of both sizes of banks consider such a 

bank to be their number one competitor. 

§ A third of large banks even consider one of the 

smallest local banks, those with $1 billion or 

less in assets, as a top three competitor for small 

business lending.

Large Banks Are More Transactional, 

with Perceived Advantages in 

Convenience and Pricing

Large Banks Use Quantifiable Metrics to 

Characterize Small Businesses and Look for 

Guarantees When Lending to Start-Ups

§ Large banks use only a small number of 

quantifiable terms to describe their small 

business customers—in particular, firm revenue/

sales or loan size. Four-fifths of large banks cite 

revenue/sales.

§ The vast majority of large banks use additional 

criteria in lending to start-ups, citing a few 

specific ones; four-fifths of all large banks look 

for additional guarantees from new businesses, 

particularly SBA guarantees. 

Large Banks Are More Likely to Use Transactional 

Practices 

§ The majority of large banks use formal limits 

to define small businesses, and they require 

minimum loan amounts. Large banks are more 

than four times as likely as small banks to 

evaluate business credit scores in underwriting.

§ Large banks are more than three times as likely as 

small banks to offer credit cards, and more than 

seven times as likely to use standardized small 

business loan products. 

Large Banks Are Perceived to Be Convenient and 

Cheaper

§ Large banks are more likely to be considered by 

competitors to have an advantage in providing 

convenience, particularly by having broad 

branch networks.

§ Large banks are more likely to be considered 

by competitors to have an advantage in pricing, 

particularly in their ability to offer lower 

interest rates.
4 FEDERAL DEPOSIT INSURANCE CORPORATION

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 Small Business Lending Survey 5

SECTION 1. 

Introduction

1 On the need for access to credit, see Titan Alon et al., “Older and Slower: The Startup Deficit’s Lasting Effects on Aggregate 

Productivity Growth,” Journal of Monetary Economics 93 (2018): 68–85, https://doi.org/10.1016/j.jmoneco.2017.10.004; and Thorsten Beck, Asli Demirgüç-Kunt, and Vojislav Maksimovic, “Financial and Legal Constraints to Growth: Does Firm Size Matter?” 

Journal of Finance 60, no.1 (2005): 137–77. On the role of banks, see Federal Reserve System, “Report on Employer Firms,” Small 

Business Credit Survey, April 2017. https://www.newyorkfed.org/medialibrary/media/smallbusiness/2016/SBCS-Report-EmployerFirms-2016.pdf; and Federal Reserve Bank of Cleveland. 2016 Small Business Credit Survey Report on Microbusinesses: 

Nonemployer and Small Employer Firms. November 2017. https://clevelandfed.org/global%20search?q=2016+Small+Business+-

Survey%3A+Report+on+Microbusinesses%3A+Nonemployer+and+Small+Employer+Firms.+Published+November+2017.+Federal+Reserve+Bank+of+Cleveland. 

2 On the advantages of banks relative to other external credit options, see Gregory Udell, “What’s in a Relationship? The Case of 

Commercial Lending,” Business Horizons 51 (2008): 93–10.

3 On the importance of small businesses to the U.S. economy, see U.S. Small Business Administration, Office of Advocacy, Frequently Asked Question (2017), https://www.sba.gov/sites/default/files/advocacy/SB-FAQ-2017-WEB.pdf. 

4 For a full description of the structural changes in the industry, see Federal Deposit Insurance Corporation, FDIC Community 

Banking Study, December 2012, https://www.fdic.gov/regulations/resources/cbi/report/cbi-full.pdf; and Eric C. Breitenstein 

and Nathan Hinton, “Community Bank Mergers since the Financial Crisis: How Acquired Community Banks Compared with Their 

Peers,” FDIC Quarterly 11, no. 4 (2017): 41–52, https://www.fdic.gov/bank/analytical/quarterly/2017-vol11-4/fdic-v11n4-3q2017-

article2.pdf.

5 The Call Report measure is the sum (reported to regulators) of outstanding small commercial and industrial loans, small commercial real estate loans, and small agricultural and farmland loans. See the box at the beginning of Section 2 for a discussion of the 

small business lending captured by regulatory Call Reports. 

The survival and growth of small businesses depends 

on access to credit, and banks are the most common 

source of external credit for small firms.1 Banks 

are able to provide this degree of financing because 

they have a special ability to identify creditworthy 

small businesses that often lack verifiable evidence 

of their quality.2 Yet, despite the importance of 

banks to small businesses and the importance of 

small businesses to the larger economy, very little 

comprehensive information is available about small 

business lending by banks.3

 In particular, evidence 

is scarce about how banks define small business 

lending, what approaches they take to meet the 

needs of these customers, and whether small banks 

and large banks approach small business lending in 

significantly different ways. 

The need for such information is important given 

the trends in the banking industry since the Great 

Recession. One such trend is consolidation: between 

2008 and 2017 the number of small banks in the 

country dropped by nearly a third and small-bank 

assets dropped by more than 14 percent, whereas large 

banks increased their assets by 13 percent (in this 

report, small banks are defined as those with under 

$10 billion in assets, and large banks as those with 

at least $10 billion in assets).4 Even so, at the end of 

2017 small banks, though holding only 17 percent of 

banking assets, held nearly 53 percent of small loans 

to businesses (according to the Call Report measure 

for small business lending).5 Another trend is the 

decline in the number of bank branches. In 2017 there 

were nearly 10 percent fewer branches in operation—

for all sizes of banks—than there had been in 2008. 

The critical question, then, is how the continuation 

of these trends is likely to affect the availability 

of credit to small businesses. The answer to that 

question requires a many-faceted answer to a 

different question: how do banks manage their small 

business lending, and in particular do small banks 

differ from large banks and are any such differences 

likely to affect small businesses? 

The established understanding of small business 

lending is that small and large banks do differ in 

the practices they use, the geographic areas they 

serve, and the types of information on which they 
6 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 1

base their decisions (see the box for detail on these 

differences). One implication is that the continued 

decline of small banks could have significant adverse 

effects on access to credit by these banks’ small 

business customers even if large banks continued to 

operate in the affected geographic area. This concern 

is most acute for firms that have little quantifiable 

evidence of their creditworthiness—most notably, 

start-ups. Although some evidence exists that is 

consistent with the established view of differences 

between small and large banks, no nationally 

representative survey has asked banks of all sizes to 

describe how they conduct small business lending, 

making it difficult to understand the possible 

implications of these practices for small businesses’ 

access to credit in the future.

To fill this knowledge gap, the Federal Deposit 

Insurance Corporation recently conducted the 

Small Business Lending Survey (SBLS) to collect 

RELATIONSHIP LENDING AND TRANSACTIONAL LENDING

The consensus explanation for banks’ centrality 

to small business finance is that banks have a 

unique ability to generate information that allows 

them to identify the high-quality small firm and, 

by extension, the profitable small business loan.a

Although all banks are thought to use a variety of 

methods to identify high-quality small businesses, 

small and large banks are widely considered to 

hold distinct advantages in how they generate 

information. As a result, small and large banks are 

expected to manage their small business lending 

programs differently. 

Specifically, small banks are regarded as having 

a comparative advantage in gathering and using 

“soft” information—knowledge of both the local 

community and the small businesses within it—

which the bank has accumulated over multiple 

interactions, and which is hard to quantify or 

transmit. Small banks are typically located within 

the communities they serve, which therefore 

lowers the transaction costs of engaging with and 

monitoring the firm or of gathering knowledge of 

the local market. Further, small banks are usually 

closely held organizations with few managerial 

layers between bank owners and loan officers, so 

that the loan officer may be more motivated to 

gather and use soft information when deciding 

whether to grant a business loan.b Small banks 

are therefore considered more flexible and able to 

engage with small businesses on a case-by-case 

basis. It is for these reasons that small banks as a 

group are believed to specialize their commercial 

and industrial lending to small businesses and are 

typically called relationship lenders. 

Large banks are regarded as taking advantage of 

economies of scale to gather and use large amounts 

of quantifiable, or “hard,” information about 

the borrower. This reliance on hard information 

requires that bank management specify the types 

of data used as well as the metrics for determining 

small business quality, usually well before any 

business applies for a loan. Further, since the 

information used by large banks is quantifiable, 

it can be submitted and shared electronically, 

which may reduce the need for the large bank 

decisionmakers to be in close proximity to the 

small business. This structure facilitates a highvolume small business lending model, and is often 

referred to as transactional lending.

a Udell, “What’s in a Relationship?”

b Allen N. Berger and Gregory F. Udell, “Small Business Credit Availability and Relationship Lending: The Importance of 

Bank Organisational Structure,” Economic Journal 112, no. 477 (2002): 32–53; and Jeremy C. Stein, “Information Production and Capital Allocation: Decentralized versus Hierarchical Firms.” Journal of Finance 57, no. 5 (2002): 1891–921, https://

doi.org/10.1111/0022-1082.00483.
 Small Business Lending Survey 7

Section 1

high-quality data on the small business lending 

practices of a large, nationally representative sample 

of U.S. banks. The survey had a sample response 

rate of 60 percent, with approximately 1,200 banks, 

or more than one-sixth of all banks in the country, 

responding. The answers given to the questions 

have been weighted to reflect the whole population 

of U.S. banks. There are currently few other surveys 

of small business lending that survey banks, and 

these other surveys include convenience samples 

of only small banks, which prevents comparison 

between different-sized banks; these other surveys 

also cover fewer topics.6 The SBLS is the only survey 

able to provide nationally representative findings 

that reflect a broad view of the practices of the entire 

industry, including both small and large banks.

The survey instrument was developed in 

consultation with experts at the U.S. Census Bureau 

and benefited from suggestions by more than 40 

banks of all sizes across the United States; these 

banks agreed to provide feedback on draft versions 

of the survey in one-on-one interviews throughout 

2015.7 The survey, which was conducted between 

June 2016 and January 2017, captured information 

about banks’ experiences in the calendar year 2015.

6 See Federal Reserve System and Conference of State Bank Supervisors, Community Banking Research and Policy Conference, October 4–5, 2017, Community Banking in the 21st Century 2017, https://www.communitybanking.org/~/media/files/

cb21pub_2017_book_web.pdf; and Jeff Bajek, “RMA Survey: Trends in Small Business Lending at Community Banks,” RMA 

Journal, March 2017, https://www.rmahq.org/ProductDetail.aspx?productid=491302131. Both publications report on surveys 

that use convenience sampling rather than random sampling. An exception is the Federal Reserve Bank of Kansas City’s newly 

launched KCFed Small Business Lending Survey, April 2, 2018, https://www.kansascityfed.org/~/media/files/publicat/research/

indicatorsdata/smallbusiness/2018/1stquarter/smallbusinesslendingsurvey04-02-18.pdf?la=en, which uses a nationally 

representative sample that includes large banks but has a narrower focus on the terms of lending offered by banks to small 

businesses. There are also current surveys of small business owners about their credit needs and experiences, which use either 

convenience samples or focus on a small set of firms. For examples of a small business owner surveys, see Federal Reserve 

System, “Report on Employer Firms,” Small Business Credit Survey, April 2017, https://www.newyorkfed.org/medialibrary/

media/smallbusiness/2016/SBCS-Report-EmployerFirms-2016.pdf or DesRoches, David and Potter, Frank and Santos, Betsy 

and Sengmavong, Ae and Zheng, Yuhong, “Kauffman Firm Survey (KFS) Seventh Follow Up Methodology Report,” June 28, 2013, 

https://ssrn.com/abstract=2286725. 

7 The survey development phase involved three rounds of interviews with institutions in both rural and urban areas and in ten 

states. See Appendix A for details on sampling methodology, survey development, and survey validation; see Appendix B for a 

discussion of the extrapolation methodology used to generate estimates, presented in Section 2, of small business lending by 

banks that is understated in current regulatory reports; see Appendix C for the full survey instrument.

The survey questions covered the following subject 

areas:

§ Banks’ characterizations of their small business 

borrowers

§ The volume of C&I lending to small businesses 

that is not captured in current bank reporting to 

regulators

§ Banks’ market area and their competitive 

environment for small business lending

§ Competitive practices and advantages

§ Loan products offered and underwriting 

practices, including for loans to start-ups.

The answers given in the first two areas allow the 

survey to make a particularly significant contribution 

to the measurement of small business lending. As 

explained in Section 2 of this report, the standard 

loan-size measure for small business C&I lending 

does not fully correspond to banks’ own definitions 

of what is a small business and what is small business 

lending, and therefore the standard measure is unable 

to capture substantial portions of such lending. The 

survey has made it possible to quantify two missing 

portions. Thus, the findings from the survey provide 

policymakers, bankers, and academics a better 

understanding of aspects of small business lending by 

banks that is currently understated.
8 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 1

The answers given in the remaining areas all relate 

to the approaches that banks take toward small 

business lending, and provide direct evidence on 

the differences between small and large banks. 

Sections 3, 4, and 5, each in its separate subject 

area, provide evidence in support of the established 

understanding, but they also show that, in practice, 

the differences between the approaches taken 

by the two sizes of banks involve many nuances. 

Although small and large banks do emphasize 

distinct aspects of small business lending, a core 

set of practices centering on locally-based personal 

interactions characterizes much of small business 

lending regardless of bank size. 

Sections 3, 4, and 5 report the survey findings 

in detail, by bank size, with Section 3 focusing 

on the environment for banks (market areas and 

competitors), Section 4 looking both within and 

without (competitive practices and perceptions of 

advantages), and finally, Section 5 focusing on the 

bank itself (loan products offered and underwriting 

practices). Each of these sections specifies the 

topic to be addressed and its rationale, describes 

the survey findings, and concludes by briefly 

discussing implications for small businesses’ future 

access to credit.
 Small Business Lending Survey 9

SECTION 2. 

Defining and Measuring Small 

Business Lending

Despite the importance of small businesses to 

the U.S. economy and the importance to small 

businesses of credit received from banks, there is 

no comprehensive measure of bank small business 

lending. The best quantitative measure available 

consists of the amount of outstanding small 

loans to businesses and farms that banks report 

on their quarterly Call Reports to regulators (see 

box). The Call Report uses specific definitions 

that are standard across banks and across time 

periods. Moreover, the definitions result in numbers 

that are accurate for what they are counting and 

are frequently used by regulators, bankers, and 

academics to describe and study small business 

lending. However, the strength of this measure—

consistency across banks—is precisely why it likely 

misses important parts of small business lending: 

banks’ definitions of small business lending may 

differ from one based solely on a specific loan size, 

and as a result, some small business lending may 

not be captured by regulatory reports. This section 

uses the survey findings to answer two important 

questions: First, what size businesses and what size 

loans do banks themselves consider to be small, 

and in that regard, do small and large banks differ? 

Second, is small business lending by banks as 

measured by the Call Report understated and, if so, 

to what extent? 

Specifically, this section investigates the small 

commercial and industrial (C&I) loans to businesses 

captured by the Call Report, defined as outstanding 

C&I loans of $1 million or less at the time of 

origination. This report refers to this component 

of the Call Report as the “Call Report proxy” for 

bank small business C&I lending. While most 

policymakers, bankers, and academics would agree 

that firms receiving loans under the $1 million 

mark are small, the concern is that the proxy fails to 

pick up C&I loans of more than $1 million made to 

businesses that the banks themselves categorize as 

small. Therefore, the survey explores whether banks 

have varied definitions of small business lending 

that deviate from the loan-size definition used by 

the proxy. Another significant concern is that the 

definition of small business lending used in the Call 

Report excludes any lending secured by residential 

real estate, even though banks commonly accept 

personal real estate as collateral for small business 

loans (as is shown in Section 5). The box referred 

to above provides a richer explanation of the Call 

Report and the types of loans it covers under small 

business lending.

2.1 Defining Small Business Borrowers: 

Banks’ Approaches

This subsection explores whether banks have 

varying definitions for whom they consider to 

be small business borrowers, and whether these 

definitions differ from the $1 million limit of the 

loan-size proxy. In particular, the coexistence 

in the U.S. banking industry of both small and 

large banks (those with assets under $10 billion 

and those with assets of $10 billion and over, 

respectively) suggests that any quantitative measure 

such as the proxy may coincide more with some 

banks’ definitions than with others’. To provide 

insight into the variations among banks in this 

regard, the survey asked banks to describe their 

small business customers and specify whether 

there are certain limits by which they define small 

business customers and loans. 

One might expect that a bank’s approach to lending 

would affect its perception of its small business 

borrowers. For example, if small banks as a group 

are relationship lenders, as they are commonly 

believed to be, then individual small banks are more 

likely to develop a fuller picture of their borrowers 

by taking into account qualitative information in 
10 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 2

The Call Report Measurement of Small Business Lending by Banks

“Call Report” refers to the Consolidated Report 

of Condition and Income that every U.S. bank 

is required to submit to regulators each quarter. 

The instructions for Schedule RC-C Part II 

define loans to small businesses and small farms 

as the sum of (a) the outstanding commercial 

and industrial (C&I) loans of $1 million or less 

at the time of origination, (b) the outstanding 

commercial real estate loans with origination 

amounts of $1 million or less, and (c) the 

agricultural production and farmland loans of 

$500 thousand or less. The FDIC’s Small Business 

Lending Survey focused exclusively on small 

business C&I lending captured in (a), which in 

this report is referred to as the “Call Report proxy” 

(or “loan-size proxy”).

The quantitative limit of the Call Report 

proxy with regard to C&I lending reflects the 

assumption that the borrowers of loans under 

$1 million are businesses that are small. Because 

of the high correlation between loan size and 

business size, in the early 1990s regulators 

adopted the $1 million loan limit as a proxy 

definition of small business. However, since 

that time, the limit has never been adjusted for 

inflation; if it had been, in December 2015 it 

would have been over $1.6 million.a As a result, 

the probability is high that loans of greater than $1 

million are extended to small businesses but are 

not captured by the proxy.

The proxy uses loan size as the criterion rather 

than borrower size because all banks track loan 

size but not all banks track business size.b The 

value of using information that banks already 

record was reaffirmed during the survey 

development phase, when FDIC researchers 

visited 40 banks of various sizes, serving various 

geographic markets across the United States, to 

discuss their ability to provide the information 

sought. The initial draft of the survey contained 

multiple questions asking banks to provide data on 

C&I loans by both purpose and size of firm. The 

interviews, however, revealed that many banks, 

particularly smaller ones, do not track much 

information in their core data systems about the 

borrower other than loan amount for the small 

business loans. As a result, many were not able to 

report loans by size of small business (for example, 

as measured by firm gross annual revenue) 

without substantial investments of staff resources. 

Aside from limiting “small business lending” by 

dollar amount, the proxy places a nonquantitative 

restriction on what is included under small 

business C&I lending. Loans secured by real 

estate are recorded in the Call Report by their 

primary collateral rather than by purpose, and 

the Call Report therefore considers a business 

loan secured by a 1- to 4-family residential 

property to be a home mortgage rather than a 

business loan, even if the purpose is to support 

the operations of a small business. Thus, the Call 

Report small business loan proxy does not capture 

small business loans that are collateralized by the 

owner’s residence.c

a Calculations are based on the Consumer Price Index for All Urban Consumers (CPI-U) of the Bureau of Labor Statistics.

b See 57 Fed. Reg. 54165 (Nov. 17, 1992) 54235-54239. https://cdn.loc.gov/service/ll/fedreg/fr057/fr057222/fr057222.pdf.

c The survey questions did not focus on the two other Call Report components that capture other lending that supports the 

operations of small businesses: (b) commercial real estate loans with originations less than or equal to $1 million, and (c) 

agricultural production and farmland loans with origination amounts less than or equal to $500,000.
 Small Business Lending Survey 11

Section 2

addition to quantitative measures. By contrast, if 

large banks as a group are transactional lenders, as 

they are commonly believed to be, then individual 

large banks are more likely to view small business 

borrowers in more strictly quantitative terms in 

order to quickly compare the borrower’s information 

with the predetermined quantitative limits set for 

specific loan programs. This difference in approach 

could lead to substantial differences in what the two 

sizes of banks consider to be their small business 

customers and their small business loans.8 As Figure 

2.1 illustrates, there are in fact substantial differences 

between small and large banks in how they describe 

their small business customers. 

Figure 2.1 shows the shares of small banks and large 

banks that describe their small business borrowers 

using answers that fall within one or another of ten 

broad categories.9 The particular survey question 

was an open-ended one asking banks to describe 

their small business borrowers. Large banks 

generally describe their small business borrowers in 

terms of specific financial characteristics, especially 

revenue or sales, whereas small banks display much 

greater diversity of opinion about what makes a 

business “small.” Here and throughout this report, 

differences discussed between different sizes of 

banks are statistically significant at the 10 percent 

level at least, and typically at higher levels of 

precision than 10 percent.

As the figure indicates, the overwhelming majority 

of large banks (78.9 percent) use revenue or sales to 

characterize their small business borrowers, and some 

also mention loan size or aggregate loan exposure 

(26.9 percent and 21.0 percent) as a defining feature of 

small businesses. Large banks limit their descriptions 

to a few key, measurable financial concepts, 

which is consistent with a more quantitative—or 

transactional—approach to small business lending.

Although revenue or sales is the most commonly 

referenced concept for small banks, more than half 

of small banks do not consider revenue or sales in 

their description of their small business customers. 

8 For a fuller discussion of the differences between relationship and transactional small business lending, see the box in Section 1.

9 More than 50 distinct concepts were mentioned that were aggregated into these 10 categories. In addition to describing their 

small business customers, some banks also referenced characteristics of their own bank in the response, or responded that all 

(or none) of their business lending is to small businesses. 

Further, only very small shares of small banks 

consider loan size or loan exposure to be a defining 

feature of their small business borrowers. Instead, over 

a quarter (26.1 percent) of small banks see ownership 

structure (for example, whether a company is owner 

operated, closely held, or a “mom-and-pop shop”) as 

an important defining feature of small businesses. 

In addition, between 10 and 20 percent of small 

banks discuss number of employees, business focus 

(for example, if the business has a “local footprint,” 

is “involved in the community,” or needs “personal 

attention”), or owner characteristics (for example, if 

the owner is “local” to the community, “wears many 

hats,” or is active in daily operations). 

The differences between small and large banks in 

how they define their small business customers are 

further illustrated by their responses to specific survey 

questions asking about their use of either aggregate 

loan exposure (ALE) or gross annual revenue (GAR) 

as quantitative limits for defining small businesses. 

Figure 2.2 shows the shares of small and large banks 

that indicate they use such limits. The responses are 

analogous to the open-ended responses that described 

their small business borrowers: a substantial majority 

of large banks use either aggregate loan exposure (70.3 

percent) or gross annual revenue (61.8 percent) as a 

limit to define small businesses, whereas only 20.4 

percent of small banks define small businesses by a 

GAR limit and an even smaller share (14.7 percent) 

use an ALE limit. 

Small banks’ lack of reliance on strict firm-revenue 

limits combined with their use of more diverse and 

generally less quantifiable concepts to describe their 

small business customers suggests that small banks 

have a more varied view of their small business 

borrowers, consistent with a greater reliance on 

relationship lending methods. The heavy use of 

limits by large banks, particularly ALE limits, 

suggests that the current Call Report definition of 

small business C&I lending by loan size may be 

more in sync with these banks, provided the proxy is 

close to the limits they use. 
12 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 2

Therefore, to compare how well banks’ quantitative 

limits coincide with the proxy limit of $1 million, 

the survey investigated the sizes of the limits banks 

use in practice. The results appear in Figure 2.3. 

For the banks that use ALE limits, Panel A reports 

the shares of small and large banks that use one or 

another of three particular dollar limits. The fact 

that the limits used are often lower than or equal 

to the $1 million used by the Call Report proxy 

suggests that for banks that do use ALE limits, the 

proxy definition is a reasonable approximation of 

their practices. Specifically, of the banks that use 

limits, nearly 70 percent of small banks and nearly 

60 percent of large banks use a limit equal to or less 

than $1 million. However, of the large banks that 

use an ALE limit—and large banks are those most 

Figure 2.1: Percentage of Banks That Reference These Characteristics When Describing Small 

Business Borrowers

Source: SBLS Question 1.

Notes: Entries marked with a 

“w” indicate that the number of 

responses falls below the allowable 

reporting threshold for protecting 

respondents’ identities. At the 

statistical significance of 10 percent, 

“*” denotes that small banks are 

more likely than large banks to use 

this characteristic to describe small 

business borrowers; “+” that large 

banks are more likely than small 

banks. “Characteristics” categories 

aggregate individual bank responses 

to an open-ended question; results 

will not sum to 100.0 percent.

0.0

w

w

w

0.0

9.5

21.0 +

26.9 +

15.6

78.9 +

1.3

1.7

10.8

16.1

18.8

26.1*

3.3

6.5

10.9

47.9

0.0 20.0 40.0 60.0 80.0 100.0

Loan Purpose

Borrower Creditworthiness

Owner Characteristics

Business Focus

Number of Employees

Ownership Structure

Aggregate Loan Exposure

Loan Size

Financial Health

Revenue or Sales

Small Large

Financial Characteristics

Business Characteristics

Figure 2.2: Percentage of Banks That Use a Maximum Allowable Limit for Either of These 

Financial Measures to Define Small Business Lending

Source: SBLS Questions 3 and 4.

Notes: At the statistical significance 

of 10 percent, “+” denotes that large 

banks are more likely than small banks 

to use this maximum allowable limit to 

define small business.

61.8 +

70.3 +

20.4

14.7

0.0 20.0 40.0 60.0 80.0 100.0

Gross Annual Revenue

Aggregate Loan Exposure

Small Large
 Small Business Lending Survey 13

Section 2

likely to use ALE to define small business lending—a 

substantial share (41.8 percent) set their ALE limit 

above $1 million, which indicates that there is small 

business lending made by banks which is not fully 

captured by the Call Report proxy.10

The survey results also show that of banks that use 

a GAR limit to define a small business, nearly all 

use a limit of $1 million or more. Figure 2.3, Panel B, 

shows that of small banks that use a GAR to define a 

small business, only 6.1 percent set their maximum 

limit below $1 million, and of large banks, none 

do. Panel B also shows that of banks that use a GAR 

limit, majorities of both sizes set it above $1 million. 

Therefore, nearly all banks that use a GAR limit to 

define a small business agree that at least businesses 

with a GAR of $1 million or less are small businesses. 

In fact, 27.1 percent of small banks and 56.4 percent 

of large banks that use a GAR limit even set it at $5 

million or more.

2.2 Measuring Small Business Lending 

(I): Loans That Exceed the Proxy Limit

As just noted, the definitions that banks set for small 

business loans are often paired with amounts that 

are above the $1 million limit of the Call Report 

proxy. This loan amount discrepancy between banks’ 

practices and the proxy is a potential source of the 

proxy’s understatement of small business lending. To 

explore this source of potential understatement, the 

survey asked banks about the quantity of outstanding 

loans of different origination amounts made to 

businesses of different sizes, as measured by the 

businesses’ GAR. The information is used to calculate 

the fraction of C&I loans above the proxy limit 

that are made to businesses considered to be small. 

Because of data constraints, results can be reported 

only for banks with $1 billion to $10 billion in assets.11

The survey finds (as just noted, only for banks with 

$1 billion to $10 billion in assets) that a substantial 

share of the outstanding C&I loans greater than 

10 It should be noted, however, that slightly over one-fifth of large banks that use an ALE limit use limits under $1 million, which 

could potentially indicate overreporting of small business lending. 

11 Because of the limitations of the core data systems at most banks with less than $1 billion in assets, only banks with more than 

$1 billion in assets were asked these questions in the survey. Unfortunately, however, the number of banks with assets greater 

than $10 billion that answered these questions falls below the reporting threshold for protecting respondents’ identities. 

$1 million—loans not captured by the proxy—are 

made to businesses with GAR of $1 million or less 

that are generally understood to be small (Figure 

2.3, Panel B, shows that virtually all banks that use 

GAR limits use one of $1 million or above). Figure 

2.4 presents, for Q4 2015, the ratio of outstanding 

C&I loans originated at amounts greater than $1 

million allocated by the borrower’s GAR, to total 

outstanding C&I loans originated at amounts greater 

than $1 million. For these banks, 21.2 percent of all 

loans originated at amounts greater than $1 million 

are made to businesses with a GAR of $1 million 

or less. An additional 38 percent of these loans 

are made to businesses with a GAR of between $1 

million and $10 million. Given that the GAR limits 

used by some banks to define small businesses are 

above $1 million, it is very likely that the share of 

loans over $1 million made to businesses with a GAR 

of between $1 million and $10 million also includes 

loans to small businesses. Thus, for banks with 

assets between $1 billion and $10 billion, at least onefifth and possibly more than one-half of the loans 

they originated above the proxy limit are actually 

made to small businesses.

2.3 Measuring Small Business Lending 

(II): Loans by Banks That Specialize 

Their C&I Loans to Small Businesses 

Small business lending at amounts over the $1 

million mark made by banks with under $1 billion 

in assets was explored as well. The established 

understanding of small business lending is that 

small banks (banks with assets under $10 billion) 

focus most of their C&I lending on small businesses. 

This may be partly because the relationship 

lending orientation of small banks gives them an 

informational advantage in small business lending, 

compared with large banks. In addition, very small 

banks may not have the resources to meet the 

credit needs of larger businesses without taking 

on excessive risk. Thus, if these banks indeed lend 
14 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 2

almost exclusively to small businesses, the loan-size 

proxy would understate small business lending at 

small banks—and in fact, the Call Report shows 

that over one-half of outstanding C&I loans in Q4 

2015 made by banks with less than $1 billion in 

assets were originated at amounts greater than the 

proxy limit of $1 million. To provide insight into 

this possible source of understatement by the proxy, 

the survey included a simple yes or no question, 

12 The wording of this question was informed by the discussions with the 40 banks interviewed during the survey development 

phase. Few were willing to respond affirmatively to a question that asked if “all” of their C&I lending was to small businesses 

because they were concerned that there might be a small number of loans that did not fit their small business definition and they 

did not want to misrepresent themselves to a bank regulator. Modifying the question using the words “largely all” instead of “all” 

assuaged the banks’ concerns. 

answered by banks of all sizes, on whether the bank 

considers “largely all” of its C&I lending in 2015 to 

have been made to small businesses.12

The established understanding that small banks 

specialize in small business lending is supported 

by the findings of the survey, which show that an 

overwhelming majority—86.4 percent—of the 

smallest banks (banks with less than $250 million 

in assets) make C&I loans almost exclusively to 

Figure 2.3: Percentage of Banks That Use These Limits to Define Small Business Lending 

Sources: SBLS Questions 3A and 3B.

Notes: Banks that responded “yes” to 

using maximum allowable limits for 

either of these two measures in order 

to define small business lending were 

asked the amount of the limit they 

used. At the statistical significance 

of 10 percent, small banks are more 

likely than large banks to use an 

aggregate loan exposure (ALE) limit of 

less than $1 million and to use a gross 

annual revenue (GAR) limit of exactly 

$1 million; large banks are more likely 

than small banks to use a GAR limit of 

greater than $5 million.

A. Aggregate Loan Exposure B. Gross Annual Revenue

37.7

22.0

31.9

36.3

30.5

41.8

0.0

20.0

40.0

60.0

80.0

100.0

Small Large

< $1M = $1M > $1M

6.1

39.7

15.3

27.1

28.2

27.1

56.4

0.0

20.0

40.0

60.0

80.0

100.0

Small Large

< $1M = $1M > $1M to <= $5M > $5M

Figure 2.4: Percentage of Total Outstanding C&I Loans of $1 Million or More at Origination, by 

Borrower’s Gross Annual Revenue, 2015 Q4 

(Banks with $1 Billion to Less Than $10 Billion in Assets)

Source: SBLS Question 14.

Notes: Question 14 was asked only 

of banks with assets of greater than 

$1 billion, because of the limitations 

of core data systems encountered 

at smaller banks during the survey 

development phase. However, the 

number of responses from banks 

with assets greater than $10 billion 

falls below the allowable reporting 

threshold for protecting respondents’ 

identities.

21.2

38.0

40.7 <= $1M

> $1M to < $10M

>=$10M

Borrower GAR:
 Small Business Lending Survey 15

Section 2

small businesses (see Figure 2.5). Of banks with 

assets between $250 million and $1 billion, more 

than three-quarters (76.5 percent) also say that their 

C&I loans are almost exclusively to small businesses. 

On the basis of these results, one simple way to 

comprehensively capture small business lending by 

banks with assets of less than $1 billion would be 

to count their entire C&I loan portfolio, regardless 

of the size of the original loan amount.13 Doing 

so would have increased by around 75 percent the 

amount of small business lending reported for these 

banks in the Q4 2015 Call Report proxy.14

Larger small banks (banks with assets between $1 

billion and $10 billion) are much less likely to be as 

overwhelmingly small-business oriented in their C&I 

lending. Although a substantial share (37.0 percent) 

of these banks do make largely all their C&I loans 

to small businesses, that constitutes a 40 percentage 

point or more drop compared with the smaller banks. 

Overall, 78.7 percent of small banks make largely 

all their C&I loans to small businesses. The contrast 

with large banks (those with $10 billion or more 

in assets) is not surprising: only a small share (11.6 

percent) makes largely all their C&I loans to small 

13 Note, however, that this simple method is not used in the extrapolations presented in Section 2.5. That section is focused on 

extrapolating a lower bound of the understatement of small business lending by the proxy, and therefore a more conservative 

method was used.

14 Specifically, the Q4 2015 Call Report shows that the combined outstanding C&I loans for all banks with assets less than $1 billion 

totaled $108.7 billion; of that amount, $46.8 billion was originated above $1 million and $61.9 billion below $1 million. 

businesses. As banks grow in size, the decreasing 

shares of banks that focus their commercial lending 

on small businesses is consistent with the established 

understanding that smaller banks specialize their C&I 

lending to small businesses.

2.4 Measuring Small Business Lending 

(III): Loans Secured by Residential 

Mortgages 

A second potential source of the proxy’s 

understatement of small business lending involves 

the use of residential mortgages to secure small 

business loans. The Call Report small business C&I 

loan proxy does not capture small business loans 

that are collateralized by the owner’s residence.

Loans secured by real estate are recorded in the 

Call Report by their primary collateral rather than 

by purpose. Thus, the Call Report considers a loan 

secured by a 1- to 4-family residential property to 

be a home mortgage rather than a business loan, 

even if the purpose is to support the operations of a 

small business. The survey provides an opportunity 

to investigate any understatement of small business 

Figure 2.5: Percentage of Banks That Make “Largely All” of Their C&I Loans to Small Businesses

Source: SBLS Question 2.

Notes: At the statistical significance 

of 10 percent, “‡‡” denotes that 

banks with less than $250 million in 

assets are more likely than banks with 

$250 million to less than $1 billion in 

assets and more likely than banks 

with $1 billion to less than $10 billion 

in assets to make “largely all” of their 

commercial and industrial (C&I) loans 

to small businesses; “‡” that banks 

with $250 million to less than $1 billion 

in assets are more likely than banks 

with $1 billion to less than $10 billion 

in assets; “*” that small banks are 

more likely than large banks.

B. All Banks

78.7 *

11.6

0.0

20.0

40.0

60.0

80.0

100.0

Small Large

A. Small Banks

86.4‡‡

76.5‡

37.0

0.0

20.0

40.0

60.0

80.0

100.0

< $250M $250M to 

< $1B

$1B to 

< $10B
16 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 2

lending that may be due to the use of personal real 

estate as collateral.15

Personal residential property is in fact an important 

source of collateral for small business lending. 

For many households, the most valuable asset is a 

home, and the equity may be used by small business 

owners to secure a business loan.16 There is evidence, 

both in the survey and elsewhere, that for banks and 

small businesses alike, the acceptance (by banks) 

and use (by small businesses) of 1- to 4-family 

residential properties for collateral is common. 

Section 5 of this report shows that a majority of 

banks, particularly small ones, commonly accept 

1- to 4-family residential properties as collateral for 

small business loans, and other studies estimate 

that over one-third of small businesses use personal 

assets to secure loans.17

For small banks—and particularly for the smallest of 

the small—the findings of the survey show that C&I 

loans secured by 1- to 4-family residential properties 

are an important part of the overall C&I portfolio. 

Banks of all sizes were asked for the volumes of their 

total C&I originations and for their C&I originations 

15 In this report, all C&I loans that are secured by 1- to 4-family residential properties are assumed to be loans to small businesses, 

on the basis that large firms are not considered likely to use these assets as collateral.

16 See tables 5 and 8 of Federal Reserve System, Board of Governors, 2016 Survey of Consumer Finances, https://www.federalreserve.gov/econres/files/scf2016_tables_public_real_historical.xlsx.

17 See Federal Reserve System, “Report on Employer Firms,” Small Business Credit Survey, April 2017, https://www.newyorkfed.

org/medialibrary/media/smallbusiness/2016/SBCS-Report-EmployerFirms-2016.pdf.

secured by 1- to 4-family residential properties for the 

calendar year 2015. Figure 2.6 presents the ratio of 

C&I originations secured by 1- to 4-family residential 

properties to total C&I originations, which indicates 

whether the proxy may not capture small business 

C&I lending for the reason that the loan is secured 

with personal residential collateral. Overall, just 

over 6 percent of the C&I loan originations made by 

small banks are secured by 1- to 4-family residential 

properties. Such loans make up a much smaller part of 

large banks’ C&I lending—only 1 percent. 

Among all small banks, the use of 1- to 4-family 

residential properties as small business lending 

collateral is correlated with size: those loans make up 

nearly 15 percent of the C&I portfolio of banks with 

less than $250 million in assets, but only 3.1 percent 

of the portfolio of banks with $1 to $10 billion in 

assets. This relationship between bank size and 

C&I lending secured by 1- to 4-family residential 

properties likely reflects the findings presented 

above that the smallest banks are more likely than 

larger small banks to specialize their C&I lending to 

small businesses. In addition, as discussed further in 

Figure 2.6: Percentage of Total C&I Originations Secured by 1- to 4-Family Residential Properties

Source: SBLS Questions 8 and 9.

Notes: At the statistical significance 

level of 10 percent, “‡‡” denotes that 

banks with less than $250 million in 

assets are more likely than banks with 

$250 million to less than $1 billion in 

assets and more likely than banks 

with $1 billion to less than $10 billion in 

assets to have their total C&I loans to 

small businesses be secured by 1- to 4- 

family residential properties; “‡” that 

banks with $250 million to less than $1 

billion in assets are more likely than 

banks with $1 billion to less than $10 

billion in assets; “*” that small banks 

are more likely than large banks.

B. All Banks

6.1 *

1.0

0.0

20.0

40.0

60.0

80.0

100.0

Small Large

A. Small Banks

14.7‡‡

9.3‡

3.1

0.0

20.0

40.0

60.0

80.0

100.0

< $250M $250M to 

< $1B

$1B to 

< $10B
 Small Business Lending Survey 17

Section 2

Section 5, small banks (banks with assets under $10 

billion) are somewhat more likely than large banks 

to accept personal real estate as collateral for small 

business lending.

2.5 Extrapolating a Lower Bound on the 

Proxy’s Understatement of Small 

Business Loans

As the introduction to this section explains, the 

survey investigates whether the best available 

measure of small business C&I lending—the Call 

Report proxy—understates actual bank lending to 

small businesses in two ways. The survey results 

show, first, that the proxy does not capture loans 

to small businesses that are originated at amounts 

above $1 million and, second, that it does not 

capture loans that are secured by residential 

real estate. To extrapolate a lower bound for the 

understatement produced by these two exclusions 

from the proxy, the survey’s nationally representative 

estimates are combined with the Q4 2015 Call 

Report amounts of bank C&I lending.18 It should 

be noted that since outstanding loans are a stock 

measure, the Q4 figures reflect all outstanding C&I 

loan dollars for a bank at that moment in time.19

As discussed in Section 2.2, of the outstanding C&I 

loans originated at amounts above $1 million by 

banks with assets between $1 billion and $10 billion, 

at least one-fifth were made to small businesses—

that is, businesses with GAR of $1 million or less, 

which by common agreement are considered small 

businesses. These loans are not captured by the 

proxy because they are above the proxy’s dollar 

limit of $1 million. Extrapolations presented on 

Table 2.1 using survey results and the Q4 2015 Call 

Report indicate that the lower bound of the small 

business lending understatement caused by not 

18 For the reader’s convenience, the details of how the extrapolations are calculated are provided in Appendix B. 

19 “Stock” values are snapshot values observed at a point-in-time, such as current assets and current liabilities. 

20 The lower bound extrapolation is substantially more conservative than an extrapolation using the simple method of counting 

as small business lending all C&I loans made by these banks, regardless of origination amount, as discussed in Section 2.3. The 

conservative method used in this subsection is discussed in Appendix B. If instead the simple method is applied to the bottom 

86 percent of banks with assets of less than $250 million, when ranked by total C&I lending, and the bottom 76 percent of banks 

with assets of between $250 million and $1 billion, then the Q4 2015 Call Report shows that their combined C&I lending for loans 

with origination amounts above $1 million was $16.9 billion, which generates a substantially larger potential understatement 

than the one yielded by the conservative method. 

counting outstanding loans originated above $1 

million that are made to businesses with GAR of 

$1 million or less—by banks with assets between 

$1 billion and $10 billion—is at least $19.1 billion. 

It should be noted that businesses with GAR of 

greater than $1 million that receive outstanding 

C&I loans originated with amounts greater than $1 

million can also be small businesses, but the level of 

fineness of the information collected in the survey 

does not allow for the calculation of this potential 

understatement.

In addition, the survey results discussed in Section 

2.3 show that the vast majority of the small banks 

with assets of under $1 billion specialize their C&I 

lending to small businesses. These are the banks 

with assets of less than $250 million and with assets 

of between $250 million and $1 billion. Of these 

banks, 86.4 percent and 76.5 percent, respectively, 

consider largely all of their C&I lending to be to 

small businesses. For these banks as for all banks, 

C&I loans originated at amounts of less than $1 

million are included in the proxy as small business 

lending, yet the C&I loans originated at amounts 

above $1 million are not. Combining the survey 

results and the Q4 2015 Call Report, Table 2.1 

shows that the lower bound for the understatement 

of loans originated above $1 million made by the 

two groups of the smallest banks is extrapolated 

to be $60.2 million for banks with fewer than $250 

million in assets, and $32.3 million for banks with 

assets between $250 million and $1 billion. The 

understatement is therefore extrapolated to be at 

least $92.5 million in total for banks with assets of 

less than $1 billion.20

The second source of understatement by the 

Call Report proxy, as discussed above in Section 

2.4, is that 1- to 4-family residential properties 

secure a nontrivial share of C&I loan originations, 
18 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 2

particularly for banks with less than $1 billion in 

assets, yet loans secured by such properties are 

recorded on the Call Report as residential mortgages, 

even though the loan purpose is commercial and 

industrial. Table 2.1 shows that the extrapolated 

lower bound of the understatement of outstanding 

small business loans that is due to the proxy’s 

exclusion of loans secured by 1- to 4-family 

residential properties is $15.6 billion for small banks 

(under $10 billion) and $2.7 billion for large banks 

($10 billion or above), or at least $18.3 billion total for 

calendar 2015.21

The sum of lower-bound extrapolations presented 

in this subsection suggests that relying on the Call 

Report proxy understates total bank small business 

C&I lending by at least $34.8 billion for small banks 

and by $2.7 billion for large banks, for the reason 

that the proxy does not include loans to small 

businesses that either were originated at amounts 

greater than $1 million or were secured by 1- to 

4-family residential properties. The amounts of 

small business C&I lending recorded by the proxy 

in Q4 2015 totaled $121 billion at small banks and 

21 Refer to Appendix B for the assumptions used to relate the survey question to the Call Report proxy. The survey question asks 

about loan originations (a flow), whereas the Call Report proxy collects information on outstanding loan dollars (a stock). See 

footnote 19 for a definition for “stocks.” In contrast, flow values are quantities observed over a specified time period. For example, quarterly income statements contain flow values. 

$199 billion at large banks, for a combined $320 

billion. Thus, the extrapolated lower bound of total 

C&I small business loans in Q4 2015 made by small 

banks is $156 billion, or 28.8 percent larger than 

what is captured by the proxy, and by large banks, 

$201 billion, or 1.4 percent larger than the proxy. 

For the industry, the survey findings show that total 

bank small business C&I lending was likely at least 

$357 billion in Q4 2015, or 11.7 percent larger than 

the proxy. 

2.6 Conclusions

Banks are the most common source of external 

credit for small businesses, yet there is no 

comprehensive measure of small business lending by 

banks. The best existing measure of small business 

C&I lending extended by banks is the Call Report 

proxy, which uses a loan-size measure to identify 

small business lending. But banks may define small 

businesses differently from the proxy. Therefore, this 

section first reports banks’ answers to questions on 

how they define their small business customers and 

Table 2.1: Dollar Amount Understatement of Call Report Proxy for Small Business Lending, 2015 

(Extrapolated Lower Bound)

Areas of Understatement

Small Banks All Banks

<250M 250M to 

<1B

1B to <10B Small Large Total

Unsecured C&I Loan Dollars with Origination 

Amounts of Greater $1 Million to Businesses with 

Gross Annual Revenues of:

$1 Million or Less

$60.2M $32.3M

$19.1B

$19.2B

Not 

Availableψψ

$19.2B

Greater than $1 Million

Not 

Availableψ

Not 

Availableψ

Secured by 1- to 4-Family Residential Properties, 

Actually for C&I Loan Purposes $4.4B $6.5B $4.8B $15.6B $2.7B $18.3B

Total $4.5B $6.6B $23.9B $34.8B $2.7B $37.5B

Notes: ψ Extrapolations for the lower bound of the part of the understatement of small business loans that is due to the proxy’s 

exclusion of loans with origination amounts of greater than $1 million to businesses with gross annual revenues of greater than $1 

million cannot be calculated because it is unknown what portion, if any, of these loans is made to businesses that banks consider to 

be small. ψψ The number of large banks that answered the questions used for the extrapolations falls below the allowable reporting 

threshold for protecting respondents’ identities.
 Small Business Lending Survey 19

Section 2

small business loans. Then, if the answers to these 

questions indicate there is small business lending 

that the proxy does not capture, the section analyzes 

specific areas of uncaptured lending. Finally, the 

section extrapolates to derive the lower bound of the 

understatement. 

The survey shows that small and large banks differ 

in how they define small businesses. As expected, 

small banks draw on many different characteristics, 

including those that are qualitative, whereas large 

banks rely primarily on the size of the loan and the 

revenue of the firm. And of the small share of small 

banks and large share of large banks that use specific 

limits to define their small business loans, substantial 

portions use limits of greater than $1 million. Thus, 

the survey provides evidence that the best existing 

measure of bank small business C&I lending, the 

Call Report proxy, is unable to fully capture all 

loans made to small businesses. In addition, the 

survey documents that portions of banks’ C&I loan 

originations are secured by personal real estate, 

which demonstrates another way in which the proxy 

understates small business lending. 

The survey finds that the vast majority of small 

banks with assets of less than $1 billion consider 

largely all of their C&I lending to have been made 

to small businesses—a finding that confirms the 

common understanding that these banks specialize 

this lending to small firms. These are also the banks 

most likely to have their C&I loans secured by 

residential real estate. Both findings show that the 

proxy potentially understates the contribution of the 

smallest banks to small business lending relatively 

more than it understates the contribution of other 

banks. Thus, the understatement that the survey is 

able to document reinforces the importance not only 

of banks generally, but more particularly of small 

banks, as providers of small business credit in the 

United States. A conservative estimate shows that in 

Q4 2015, small banks held at least 28.8 percent more 

outstanding loan dollars to small businesses than 

the Call Report proxy captured, whereas large banks 

held at least 1.4 percent more.

In sum, the survey results document that the Call 

Report proxy substantially understates the true 

amount of small business lending by banks. A 

lower-bound estimate of the understatement based 

on the survey results indicates that for calendar 

year 2015, the proxy is at least 11.7 percent below 

the actual volume of small business C&I lending 

extended by all banks.
20 FEDERAL DEPOSIT INSURANCE CORPORATION

PAGE INTENTIONALLY LEFT BLANK
 Small Business Lending Survey 21

SECTION 3. 

Markets and Competition

22 See Allen N. Berger et al., “Does Function Follow Organizational Form? Evidence from the Lending Practices of Large and Small 

Banks,” Journal of Financial Economics 76, no. 2 (2005): 237–69, https://dx.doi:10.1016/j.jfineco.2004.06.003; Kenneth P. Brevoort 

and Timothy H. Hannan. “Commercial Lending and Distance: Evidence from Community Reinvestment Act Data,” Journal of Money, Credit and Banking 38, no. 8 (2006): 1991–2012, http://www.jstor.org/stable/4123041; Udell, “What’s in a Relationship?”; Kenneth P. Brevoort, John D. Wolken, and John A. Holmes, “Distance Still Matters: The Information Revolution in Small Business 

Lending and the Persistent Role of Location, 1993–2003,” Federal Reserve Board, Finance and Economics Discussion Series, 

Working Paper No. 2010-08 (March 1, 2010), http://dx.doi.org/10.2139/ssrn.1559989; and Sumit Agarwal and Robert Hauswald. 

“Distance and Private Information in Lending,” Review of Financial Studies 23, no.7 (2010): 2757–88, https://doi.org/10.1093/rfs/

hhq001.

23 The survey provided banks with nine geographical options and a write-in option. All the options were aggregated into five 

broader categories in order to meet the disclosure review thresholds for protecting respondents’ identities. These aggregations 

do not change the qualitative results. 

This section investigates the market for small 

business lending, looking at how banks view their 

geographic reach in small business lending and what 

kinds of technologies and techniques banks use to 

bridge the physical distance between themselves and 

potential small business customers. The section also 

investigates what institutions, by geography and by 

size, banks consider to be their competition. 

These questions matter because if banks have narrow 

lending areas, provide businesses with few options 

to apply for loans without visiting a branch, and do 

not consider themselves to be in competition with 

nonlocal financial institutions, many small business 

borrowers may have trouble switching to another 

lender if nearby banks or nearby bank branches close. 

Similarly, if small banks serve a substantially different 

set of customers from large banks and if banks view 

themselves as solely competing with other banks of 

similar size, small-bank customers may have trouble 

accessing credit at large banks if small banks’ number 

and lending continue to decrease. On the other hand, 

if banks view nonbank financial institutions such 

as credit unions and financial technology lenders as 

important competitors, these organizations may be 

capable of filling in the gaps created by the changing 

structure of the banking industry.

3.1 What Is Your Bank’s Geographic 

Market for Loans to Small 

Businesses?

The survey explores the geographic extent of banks’ 

small business lending markets and seeks to learn 

whether large banks tend to have wider markets 

relative to their branch footprint than small banks. 

Previous studies have shown that small businesses 

located farther away from banks are less likely to 

obtain bank loans and that the relationship between 

distance and the likelihood of obtaining bank loans 

is stronger for smaller banks as well as for younger 

businesses or those that cannot clearly demonstrate 

creditworthiness.22 The link between bank credit 

and proximity, however, may have been loosened 

by recent changes in the use of technology and the 

increasing availability of data, perhaps combined 

with the trend toward fewer small banks. Any such 

loosening would give banks a broader geographic 

market for their small business loans. 

Specifically, the survey asked banks to describe 

the general geographic area where they focus 

their resources and outreach for commercial and 

industrial loans to small businesses.23 The results 

show that small business lending remains focused 

substantially on areas close to bank locations, 

particularly for small banks. 
22 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 3

Small banks have predominantly local trade areas for 

small business lending. As shown in Figure 3.1, small 

banks focus on the city where they are 

headquartered (6.5 percent), on counties containing 

or near their branches (67.3 percent), or on 

metropolitan statistical areas (MSAs) containing or 

near their branches (8.5 percent).24 Combined, 82.3 

percent of small banks selected one of these local 

options. Fewer than 10 percent of small banks focus 

their small business lending efforts on either statebased areas (8.4 percent) or at a national level (9.3 

percent). The predominantly local focus of small 

banks suggests that if all small banks exit a 

particular area, out-of-area small banks will not fill 

the local small business lending gap.

Large banks generally spread their resources across 

larger geographic areas than small banks, but a 

substantial minority is, like small banks, locallyfocused. As Figure 3.1 shows, large banks that 

describe their market area as at the state level 

constitute the largest share (42.8 percent) of large 

banks, and up to an additional 18.4 percent focus at 

24 An MSA is a geographical area with a relatively high population density at its core and close economic ties within its boundaries. MSAs may be smaller geographically than a state but may cross state lines (e.g., the Baltimore-Washington metropolitan 

statistical area).

25 The number of responses of large banks that described their market area as having a national focus did not meet disclosure 

review thresholds for protecting respondents’ identities; thus, for both large and small banks these responses were combined 

with the write-in responses describing the banks’ market areas as other than the options provided.

the national level.25 However, Figure 3.1 also shows 

that a substantial share (38.8 percent) of large banks 

consider their market to be based in a more local 

area. Among large banks, 20.5 percent consider 

their target geographic markets to be at the county 

level, and an additional 18.3 focus their efforts at the 

MSA level. Therefore, although a majority of large 

banks do not define their geographic markets at 

the level of the MSA, county, or city, the share that 

does focus small business lending efforts on these 

more local geographies is surprisingly substantial. 

This contrasts somewhat with the implications of 

the established view that large banks do not require 

proximity to their small business customers.

The overall findings suggest that the wider 

geographic focus of large banks may be able to fill 

some of the gap in small business lending that opens 

up when a small local bank closes. However, despite 

recent changes in technology and banking structure, 

location remains an important factor in small 

business lending for many banks of both sizes.

Figure 3.1: Percentage of Banks That Use This Geographic Level as Their Trade Area for Small 

Business Lending

Source: SBLS Question 15.

Notes: The survey question asks 

banks for the geographic market, 

or “trade area,” where they focus 

their resources and outreach to 

generate small business lending. 

At the statistical significance of 10 

percent, small banks are more likely 

than large banks to use a countybased geographic trade area; large 

banks are more likely than small 

banks to use an MSA or state-based 

geographic trade area.

0.0

20.0

40.0

60.0

80.0

100.0

Small Large

Headquarter City/Town

County-Based

MSA-Based

State-Based

Other, Including National

Geographic Trade Area:

9.3

8.4

8.5

67.3

6.5

20.5

18.3

42.8

18.4
 Small Business Lending Survey 23

Section 3

3.2 Where Can a Small Business Apply 

for a Loan from Your Bank?

The survey further explores the geographic extent of 

banks’ small business lending market by looking 

through the lens of where small businesses are able 

to apply for loans. The finding above that small 

banks tend to define their lending areas more locally 

than large banks suggests that the two sizes of banks 

are using different methods to reach their small 

business customers. Understanding whether in fact 

methods differ, and if so, how, may become 

increasingly relevant as branches continue to close 

and bank assets become further concentrated in 

large banks. Given the increasing use of technology 

by banks, it might be expected that banks use the 

Internet to provide greater convenience to moredistant customers. Further, since large banks are 

thought to use more technology in their small 

business lending decisions than small banks do, it 

might be expected that large banks’ greater reach is 

made possible by allowing online applications for 

small business loans.

26 The survey gave banks eight options and the ability to write in three additional answers not already listed. The responses were 

aggregated for clarity of presentation and to comply with the requirements related to protecting respondents’ identities.

27 The survey provided banks with eight possible ways and a write-in option. The difference between what large banks report and 

what small banks report is statistically significant. 

Specifically, the survey asked banks where and 

how potential small business borrowers can submit 

applications for commercial and industrial loans.26

The results suggest, surprisingly, that large banks 

for the most part extend their geographic reach 

farther than small banks through staff-timeintensive methods, with only a few large banks 

using online platforms.

Unsurprisingly, the survey finds that more than 95 

percent of both small banks and large banks accept 

applications for small business loans through their 

branches, as shown in Figure 3.2. About one-half 

of small banks also accept applications through 

phone calls (51.3 percent) and on-site visits by bank 

staff (49.4 percent). However, large banks generally 

provide their small business customers with a 

broader range of ways to submit loan applications; 

they allow, on average, 3.5 different ways in which 

small businesses can apply for loans, compared with 

2.7 different ways for small banks.27 Interestingly, the 

broader reach of large banks is driven less by use of 

the Internet and more by use of telephones and cars: 

Figure 3.2: Percentage of Banks That Allow Small Business Borrowers to Apply for Loans Using 

This Method

Source: SBLS Question 23.

Notes: Entries marked with a 

“w” indicate that the number of 

responses falls below the allowable 

reporting threshold for protecting 

respondents’ identities. At the 

statistical significance of 10 percent, 

“+” denotes that large banks are more 

likely than small banks to allow small 

business borrowers to apply for loans 

using this method. Banks may select 

multiple answers; results will not sum 

to 100.0 percent.

w 

22.8 +

83.2 +

68.7 +

95.8 

4.2

11.2

49.4

51.3

96.5

0.0 20.0 40.0 60.0 80.0 100.0

Brokers

Online

On-site Visit

by Bank Staff

Telephone Call

by Bank Staff

At a Branch

Small Large
24 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 3

large banks are 11.7 percentage points more likely 

to accept loans online than small banks, but 17.4 

percentage points more likely to accept applications 

during phone calls, and 33.8 percentage points more 

likely to accept applications during on-site visits 

by bank staff. Overall, only 22.8 percent of large 

banks accept small business applications online, 

compared with the 83.2 percent that are willing to 

via on-site visits. On-site visits have clear geographic 

limitations, so the willingness to make such visits to 

accept a loan application gives some insight into the 

continued importance of distance in small business 

access to credit.

The fact that the great majority of large banks 

provide staff-time-intensive ways for prospective 

borrowers to submit loan applications and have not 

adopted online submission of applications could 

reflect several properties of bank lending to small 

businesses. First, it may be hard for banks to adapt 

small business lending to an online environment, 

for direct human interaction appears inherent in 

the process. Even large banks, whose small business 

lending methods are shown in Sections 2 and 5 

to rely more heavily on evaluating standard data 

against preset limits, have thus far not generally 

found it worthwhile to pursue online small business 

loan applications. Second, if there is a way to make 

online small business lending profitable, there 

appears to be an opportunity for innovation by 

financial technology (FinTech) firms. To date, there 

have been few partnerships between small banks and 

FinTechs, but recent surveys have shown banks to be 

open to the possibility.28

28 See Hilary Burns, “This Fintech Partnership Could Serve as Template for Small Banks,” American Banker, April 16, 2018, https://

www.americanbanker.com/news/this-fintech-partnership-could-serve-as-template-for-small-banks; and American Bankers 

Association. “How Banks Partner with FinTech for Digital Lending.” ABA Bank Marketing. March 26, 2018, https://ababankmarketing.com/insights/how-banks-partner-with-fintech-for-digital-lending/. 

29 Stein, “Information Production”; David A. Carter, James E. McNulty, and James A. Verbrugge, “Do Small Banks Have an Advantage in Lending? An Examination of Risk-Adjusted Yields on Business Loans at Large and Small Banks,” Journal of Financial 

Services Research 25, no. 2–3 (2004): 233–52, https://doi.org/10.1023/B:FINA.0000020663.21079.d2; and Berger et al., “Does 

Function Follow Organizational Form?”

30 George W. Haynes, Charles Ou, and Robert Berney, “Small Business Borrowing from Large and Small Banks,” in Business 

Access to Capital and Credit, edited by Jackson L. Blanton, Alicia Williams, and Sherrie L. W. Rhine, 287–327, Federal Reserve System Research Conference, 1999, http://citeseerx.ist.psu.edu/viewdoc/download;jsessionid=D208864BBCA8E4D281034D453A1F3D7F?doi=10.1.1.474.279&rep=rep1&type=pdf; and Berger et al., “Function Follow Form?”

3.3 Who Are Your Bank’s Competitors? 

To investigate whether small and large banks serve 

distinct sets of small business customers, the survey 

looked at the competition these banks face. The 

evidence from the survey so far indicates that there 

is substantial geographic segmentation in the small 

business lending market. (To recapitulate: many 

banks largely lend to businesses near their branches, 

which in turn suggests that small business borrowers 

are limited to borrowing from nearby banks. Further, 

as bank branches decline in number, the local focus 

could leave small businesses with few or no feasible 

sources of bank credit. This concern may be partly 

mitigated by the fact that large banks tend to lend in 

broader areas than small banks.) In addition, there 

may also be segmentation by bank size: some small 

businesses may be better served by small banks than 

by large banks because small banks provide a more 

appropriate set of services or use a broader array of 

information to determine creditworthiness.29 Indeed, 

studies have found that small banks are more likely 

to lend to relatively smaller and younger firms and 

large banks are more likely to lend to larger and 

more mature small firms.30 If this is the case, some 

small businesses may not be able to compensate for 

the loss of a local small bank by using the services of 

a more distant large bank. 

Specifically, the survey asked banks to select which 

types of financial institutions (banks and nonbanks) 

they consider to be frequent competitors for small 

business lending, and to rank their top three 

most important competitors. If the small business 

lending market is as geographically segmented as 

the findings so far indicate it is, banks should not 

typically view banks that lack a physical presence 
 Small Business Lending Survey 25

Section 3

in their markets as competitors. And to the extent 

that there is segmentation by bank size—with 

smaller firms more likely to borrow from small 

banks, as studies have found to be the case—small 

banks would be expected to compete solely with 

other small banks and large banks with other large 

banks.31 But if, instead, most small businesses can 

be served by banks of any size, there should be more 

competition between banks of differing sizes. And if 

banks frequently view various nonbank institutions 

as important competitors, small businesses may be 

able to borrow from these organizations in the event 

they lose access to their current preferred lender. 

The survey finds that the most common and 

important competitors are other banks with a 

local branch presence, providing further evidence 

for geographic segmentation. Figure 3.3 shows the 

proportion of small and large banks that view each 

type of institution as a frequent competitor, a top 

three competitor, and its number one competitor 

(Panels A, B, and C, respectively). The overwhelming 

majority of both small and large banks (86.9 percent 

and 83.5 percent) view a local bank of some size 

as their number one competitor (Figure 3.3, Panel 

C). In contrast, nonlocal banks are seen as frequent 

competitors by only 22.1 percent of small banks 

and 32.8 percent of large banks (Figure 3.3, Panel 

A), with even fewer reporting them as top three 

competitors (Figure 3.3, Panel B), and almost no 

banks reporting nonlocal banks as their number one 

competitor (Figure 3.3, Panel C). The importance of 

nearby competitors reaffirms that physical presence 

is extremely important for small business lending, 

even for large banks. These findings are consistent 

with the finding (discussed below in Section 4) that 

large banks view their branch networks as sources of 

competitive advantage.

Banks typically view other banks of similar size 

to be their most important competitor—evidence 

consistent with segmentation by bank size in the 

small business lending market. Figure 3.3, Panel 

C, shows that nearly three-quarters of small 

31 In support of this notion, the Community Banking in the 21st Century 2017 survey finds that community banks primarily compete 

with other community banks for small business loans (defining community banks as those with $10 billion in assets or less). See 

Federal Reserve System and Conference of State Bank Supervisors, Community Banking Research and Policy Conference, October 4–5, 2017, Community Banking in the 21st Century 2017, https://www.communitybanking.org/~/media/files/cb21pub_2017_

book_web.pdf.

banks believe their number one competitor to be 

another small local bank, either banks with less 

than $1 billion in assets (53.3 percent) or banks 

with $1 billion to $10 billion in assets (20.8 percent). 

Similarly, roughly two-thirds of large banks 

view another large bank to be their number one 

competitor, with this share encompassing competitor 

banks with $10 to $50 billion in assets (20.4 percent 

of large banks) and banks with greater than $50 

billion in assets (45.0 percent). 

When competition is considered more broadly, 

however, with the focus on frequent competitors 

for small business lending (Figure 3.3, Panel A) 

and on top three competitors (Figure 3.3, Panel 

B), there is much less market segmentation by size 

and much more overlap between small and large 

banks, with large banks particularly inclined to view 

small banks as competitive threats. A substantial 

majority of large banks (69.1 percent) view even 

banks with less than $1 billion in assets as frequent 

competitors for small business lending, and slightly 

less than one-third (30.3 percent) view them as 

top three competitors. It is also not uncommon for 

small banks to see large banks—and even the largest 

banks—as competitors, with 40.0 percent viewing 

banks with more than $50 billion in assets as 

frequent competitors and 23.7 percent viewing them 

as a top three competitor. This partial segmentation 

between small and large banks suggests that there is 

a reasonably wide base of small business customers 

that are capable of borrowing from either small 

or large banks. The overlap is most noticeable in 

how banks with $1 billion to $10 billion in assets 

are viewed. Figure 3.3, Panel A, shows that almost 

every large bank—more than 95 percent—views 

these “larger” small banks ($1 billion to $10 billion 

in assets) as frequent competitors, and Figure 3.3, 

Panel B, shows that three-quarters of large banks 

(73.4 percent) view them as top three competitors. 

Majorities of small banks also view this group of 

small banks as frequent and top three competitors. 

Further, statistically equal shares of small and large 
26 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 3

banks (20.8 percent and 18.1 percent) consider 

banks with $1 billion to $10 billion in assets as their 

number one competitor. 

Turning to the nonbank results, banks’ chief 

competitor among nonbanks is credit unions. Recent 

changes in the regulations governing credit unions 

have expanded the small business lending capacity 

of these institutions.32 However, credit unions are 

typically quite small, with the median credit union 

32 For example, the National Credit Union Administration adopted a new approach to and definition of member business lending; 

the new approach and definition are seen as increasing the commercial lending capacity of federally insured credit unions. See 

81 Fed. Reg. 13530–13559 (March 2016), https://www.gpo.gov/fdsys/pkg/FR-2016-03-14/pdf/FR-2016-03-14.pdf; and Robby 

Knapp, “Member Business Loans: What Credit Unions Should Focus on Right Now,” Credit Union Journal, June 20, 2017, https://

www.cujournal.com/opinion/member-business-loans-what-credit-unions-should-focus-on-right-now.

33 National Credit Union Administration, Credit Union Data Summary 2017 Q1, https://www.ncua.gov/analysis/Pages/call-report-data/reports/paca-facts/paca-facts-2017-Q1.pdf. 

having only $30 million in assets in 2017.33 They 

are also focused more on their membership, which 

is often drawn from local populations. Thus, they 

would be expected to serve small businesses that 

are much like the small businesses served by small 

banks, thereby posing greater competition to those 

banks than to large banks.

The survey largely confirms these expectations. 

Figure 3.3, Panel A, shows that a slight majority of 

Figure 3.3: Percentage of Banks That Consider This Institution a Competitor for 

Small Business Lending

Source: SBLS Question 16.

Notes: Entries marked with a “w” indicate that the number of responses falls below the allowable reporting threshold for protecting 

respondents’ identities. At the statistical significance of 10 percent, “*” denotes that small banks are more likely than large banks 

to consider this institution a competitor for small business lending; “+” that large banks are more likely than small banks. “Nonlocal 

Bank, Any Size” is an aggregation of separate options for nonlocal banks of different sizes. “FinTech” is an aggregation of separate 

options for nonbank online lenders and marketplace lenders. See Question 16 of the SBLS for the complete list of response options 

provided. In Panels A and B, banks may select multiple answers; results will not sum to 100.0 percent.

w 

49.1 +

38.7 +

26.5

55.0

32.8

85.7 +

83.6 +

95.8 +

69.1

1.5

9.6

10.7

17.1

52.3

22.1

40.0

51.0

67.7

91.3 *

0.0 20.0 40.0 60.0 80.0 100.0

Crowd-funding

FinTech

Credit Card

Local Nonbank

Credit Union

Bank Nonlocal

Local Bank $50B

or More

Local Bank $10B

to <$50B

Local Bank $1B

to <$10B

Local Bank <$1B

Banks

Non-banks

0.0

w 

w 

w 

12.2

12.3

71.6 +

77.5 +

73.4

30.3

0.0

1.8

1.8

8.3

34.1 *

13.0

23.7

39.1

62.8

84.2 *

0.0 20.0 40.0 60.0 80.0 100.0

Small Large

0.0

0.0

0.0

0.0

w 

w 

45.0 +

20.4 +

18.1

w 

0.0

w 

w 

1.3

4.5

1.3

6.9

5.9

20.8

53.3

0.0 20.0 40.0 60.0 80.0 100.0

A. Frequent Competitor B. Top Three Competitor C. Number One Competitor

(Mark All That Apply) (Mark Only Three) (Mark Only One)
 Small Business Lending Survey 27

Section 3

both small and large banks (52.3 and 55.0 percent) 

report frequent competition with credit unions. 

However, Figure 3.3, Panel B, shows that more than 

one-third (34.1 percent) of small banks view credit 

unions as a top three competitor, compared with 

only 12.2 percent of large banks.34 Similarly, Figure 

3.4 shows that among small banks, those with less 

than $250 million in assets are about twice as likely 

as those with $1 billion to $10 billion in assets to see 

credit unions as a top three competitor (39.0 percent 

compared with 19.1 percent). This is consistent with 

the finding that banks tend to view other banks of 

similar size as their top competitors. Nonetheless, 

Figure 3.3, Panel C, shows that only 4.5 percent of 

small banks view a credit union as their number one 

competitor, implying that other banks remain the 

predominant source of competition for small banks. 

These results suggest that credit unions would be 

able to fill only a small share of any potential loss 

in access to small business credit resulting from the 

loss of local small banks.

34 The number of large banks that view credit unions as a number one competitor falls below the reporting threshold for protecting 

respondents’ identities.

35 The number of small banks that view credit card companies or FinTech firms as a number one competitor falls below the reporting threshold for protecting respondents’ identities.

Among other nonbank lenders are FinTech firms 

and credit card issuers. The availability of “big data” 

has recently prompted FinTechs to enter the small 

business lending market. Since these institutions 

generally use technology much as large banks do, 

they might be expected to be more competitive with 

large banks. 

And in fact the survey shows that FinTechs are 

considered as competitors only for large banks, but 

only as frequent competitors, not as top competitors. 

Figure 3.3, Panel A, shows that only about one 

in ten small banks view FinTechs and credit card 

issuers as frequent competitors, while Figure 3.3, 

Panel B, shows that fewer than 2 percent consider 

each (FinTechs and credit card issuers) a top three 

competitor.35 In comparison, sizeable numbers of 

large banks list FinTech and credit card issuers 

among their frequent competitors (49.1 percent and 

38.7 percent)—likely because these institutions lend 

in an even more transactional manner than large 

banks, relying almost exclusively on hard data and 

Figure 3.4: Percentage of Banks That Consider Credit Unions to Be a Top Three Competitor for 

Small Business Lending 

(Small Banks Only)

Source: SBLS Question 16.

Notes: At the statistical significance 

of 10 percent, “‡‡” denotes that banks 

with less than $250 million in assets 

are more likely than banks with $250 

million to less than $1 billion in assets 

and more likely than banks with $1 

billion to less than $10 billion in assets 

to consider a credit union to be a top 

three competitor; “‡” that banks with 

$250 million to less than $1 billion in 

assets are more likely than banks 

with $1 billion to less than $10 billion 

in assets.

39.0‡‡ 

29.5‡ 

19.1

0.0

20.0

40.0

60.0

80.0

100.0

< $250M $250M to < $1B $1B to < $10B
28 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 3

automated technologies. This view of FinTech and 

credit card issuers as frequent competitors of large 

banks dovetails with the results reported in Section 

5.1 showing that two-thirds of large banks offer 

credit cards as one of their loan products for small 

business customers. Thus, these large banks are 

setting themselves up for direct competition with 

credit card issuers. However, almost no large banks 

view FinTechs or credit card issuers as a top three or 

number one competitor.36 Thus, while FinTechs may 

eventually reshape the lending landscape, they are 

not currently viewed as a major competitor, and their 

ability to mitigate any loss to small businesses’ access 

to credit if the number of local small banks were to 

decrease would be minimal.

3.4 Conclusions

This section finds that banks compete locally and 

largely use traditional “technologies” such as the 

brick-and-mortar branch, the car, and the telephone 

as conduits for loan applications from small 

businesses. Large banks are more willing to make 

use of off-site approaches than small banks, likely 

contributing to their larger lending areas. Many of 

these larger organizations, however, remain locallyoriented, and all banks view other local banks as 

their most important and most frequent competitors. 

The results support previous findings that physical 

distance is a key component of small business 

lending, so that from the perspective of small 

businesses, the country largely remains segmented 

into a series of local lending markets rather than 

constituting a single, integrated market. The recent 

36 The number of large banks that view credit card companies or FinTech firms as a top three or number one competitor falls below 

the reporting threshold for protecting respondents’ identities.

decline in the number of bank branches across the 

country may therefore create significant problems 

for small businesses’ access to credit if the decline 

means that small businesses are left with a greater 

distance to the nearest bank branch.

In terms of competition between banks, there is 

evidence that small and large banks have a partly 

overlapping small business clientele. The fact that, 

to some extent, small and large banks consider 

themselves to be in frequent competition with the 

other for small business borrowers suggests that many 

small businesses are capable of borrowing from either 

type of bank. At the same time, however, the fact 

that banks’ main competitor tends to be a similarly 

sized bank suggests that small and large banks 

offer somewhat differentiated services that appeal 

to distinct groups of customers. Thus, the degree to 

which small businesses are able to substitute large 

banks for small ones will determine how much credit 

disruption small businesses may face as consolidation 

in the banking industry continues.

Many banks experience some competition in small 

business lending from emerging nonbank financial 

institutions, but few banks consider these to be 

among their most important competitors. Small 

banks are more concerned than large banks about 

credit unions, while large banks view both credit 

unions and FinTech firms as competition. This 

suggests that, in the absence of significant growth, 

nonbank institutions will have only a limited ability 

to fill any gaps in small businesses’ access to credit 

that result from the trend toward fewer small banks 

and fewer bank branches.
 Small Business Lending Survey 29

SECTION 4. 

Competitive Practices and 

Advantages 

37 Banks were also given a write-in option.

This section investigates the overall approaches that 

small and large banks take to small business lending 

by looking closely at the competitive practices each 

type of bank customarily uses and at each type’s 

perceived competitive advantages. The preceding 

section presents evidence of partial segmentation in 

the lending market by size: small and large banks 

often view each other as competitors, but at the same 

time they rarely view each other as top competitors. 

This suggests that their customer bases partly 

overlap, with some small businesses able and willing 

to borrow from a bank of either size, whereas other 

small businesses are much better suited to small 

banks or to large ones.

Therefore, the survey considers the extent to which 

the approaches of these organizations overlap and 

the extent to which they diverge, and whether these 

approaches correspond to the understanding that 

small banks are relationship lenders and large 

banks are transactional lenders. The answer to this 

question is important for small businesses in the 

context of the recent trend toward fewer small banks. 

For instance, if small banks approach small business 

lending in a more personalized manner than large 

banks, small businesses that need more personalized 

engagement through the loan application process 

may lose access to credit if trends continue.

4.1 How Does Your Bank Maintain and 

Generate Relationships with Small 

Businesses?

The partly overlapping competition between banks 

of different sizes that is discussed in Section 3 may 

be mirrored in an overlapping of practices between 

small and large banks. However, small and large 

banks might also be expected to use different 

practices, with small banks using relationship-based 

practices that focus on individual contact between 

staff and potential customers, whereas large banks 

may take advantage of economies of scale and scope 

to offer customers a greater range of products and 

greater convenience.

Accordingly, the survey asked banks to mark which of 

20 different practices they use to generate new small 

business lending relationships and maintain existing 

ones.37 The survey also asked banks to designate up 

to 3 practices as their top practices. The survey results 

show that there is a core set of practices for small 

business lending that is common to both small and 

large banks. Further, this core set contains practices 

that are high-touch and personal in nature. Figure 

4.1, Panel A, presents the shares of small banks and 

large banks that selected each practice as one that 

the bank uses. The figure shows that the ability to 

talk to a live person, acceptance of walk-in customers, 

community involvement, and customer referrals are 

practices cited by more than 85 percent of both small 

and large banks. Conversely, practices that outsource 

or automate small business lending are relatively 

unpopular, even among large banks. Brokers, indirect 

lending, and online applications are used by less than 

25 percent of both small banks and large banks, and 

lead generators are used by only 31.1 percent of large 

banks and a much smaller proportion of small banks. 

Together, these results suggest that for both small 

and large banks, small business lending is inherently 

relationship-focused.

Beyond these common practices, large banks appear 

to take advantage of their economies of scale and 

scope in several ways. Large banks, on average, 

use 2.8 more practices than small banks, possibly 
30 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 4

reflecting their greater resources.38 Nearly all large 

banks (95.8 percent) use their branch networks to 

generate new relationships and maintain existing 

ones, whereas only slightly over half (53.7 percent) 

of small banks do. This, along with the findings 

38 The survey finds that small banks use 8.9 different practices on average, whereas large banks use 11.7, which is a statistically 

significant difference.

of Section 3 about markets and competitors, 

underscores the crucial role that physical proximity 

plays in small business lending, and suggests 

that having multiple branches is a powerful tool 

for large banks. Large banks are also more than 

Figure 4.1: Percentage of Banks That Use This Practice to Generate New and Maintain Existing 

Small Business Lending Relationships

Source: SBLS Question 24.

Notes: Entries marked with a “w” indicate that the number of responses falls below the allowable reporting threshold for 

protecting respondents’ identities. At the statistical significance of 10 percent, “*” denotes that small banks are more likely than 

large banks to use this practice to generate new and maintain existing small business lending relationships; “+” that large banks 

are more likely than small banks. Banks may select multiple answers; results will not sum to 100.0 percent.

A. Uses Practice B. Top Three Practice

25.0

33.5 +

52.2 +

27.1

20.7 +

18.7

95.8 +

64.8

60.4 +

81.3 +

89.4 +

85.3

10.2

31.1 +

12.4

93.6 +

93.6 +

85.4 +

89.5

95.7

14.9

15.6

16.9

17.1

5.9

11.2

53.7

55.0

38.8

57.5

69.2

86.1

4.8

8.8

13.3

72.9

86.6

63.1

92.6

96.5

0.0 20.0 40.0 60.0 80.0 100.0

Transfer Services

Payroll Services

Card Payment Processing

Check Cashing Services

Online Applications

Loan Production Ofces

Branch Network

Hours Open

Marketing,

New Customers

Marketing,

Existing Customers

Staff Outreach

Community Involvement

Indirect Lending

Lead Generators

Brokers

Referrals, Professionals

Referrals, Customers

Staff Knowledge

Walk-ins

Ability to Talk

with Someone

Small Large

Personal Interaction

Outreach

External Sources

Convenience

Business Services

0.0

0.0

w 

0.0

0.0

w 

39.5 +

w 

w 

29.4

29.2

12.3

0.0

w 

w 

56.2 +

33.3

14.6

0.0

28.9

0.0

w 

w 

w 

0.4

0.8

8.9

4.4

4.8

21.1

19.9

32.6 *

w 

1.2

1.4

30.3

51.6 *

13.8

21.4

49.9 *

0.0 20.0 40.0 60.0 80.0 100.0

(Mark All That Apply) (Mark Only Three)
 Small Business Lending Survey 31

Section 4

20 percentage points more likely than small 

banks to engage in active marketing to both their 

existing customers and potential new customers, a 

divergence that could arise from large banks’ greater 

economies of scale. Finally, large banks are more 

likely than small banks to use their other business 

services, such as payroll services and, especially, 

card processing, to attract small business borrowers, 

thus leveraging economies of scope to provide 

customers with greater convenience.

Whereas there is substantial overlap in the practices 

that small and large banks use, there is less overlap 

in the practices they prioritize. Figure 4.1, Panel 

B, presents the shares of small and large banks 

that selected each practice as one of the bank’s 

top three practices. Small banks are between 18 

and 21 percentage points more likely than large 

banks to prioritize the common high-touch 

practices—live person, walk-ins, community 

involvement, and customer referrals.39 Many small 

banks also prioritize other practices that rely on 

strong connections to the community, including 

professional referrals (30.3 percent), marketing to 

existing customers (21.1 percent), and staff outreach 

(19.9 percent). 

By contrast, large banks are 30 percentage points 

more likely than small banks to view the use of their 

branch networks as one of their most important 

practices, once again highlighting the importance of 

location in small business lending. Large banks also 

rely more heavily than small banks on professional 

referrals (56.2 percent versus 30.3 percent). 

In terms of similarities, both small and large banks 

prioritize staff outreach and marketing to existing 

customers at similar rates, and although large 

banks do use their other business services to attract 

borrowers, they rarely consider the provision of 

these services to be crucial practices.40 Overall, both 

39 The number of large banks reporting walk-ins as a top three practice fell below the reporting threshold for protecting 

respondents’ identities.

40 The number of small and large banks that report card processing as a top three practice fell below the reporting threshold for 

protecting respondents’ identities; the number of large banks that report check cashing and payroll services also fell below 

the threshold.

41 Top competitors for small business lending are discussed above in Section 3.3.

42 Banks were also given a write-in option. 

small and large organizations do tend to prioritize 

different practices, with small banks using hightouch practices somewhat more intensively than 

large banks; but for banks of both sizes, relationships 

are important.

4.2 What Are the Competitive 

Advantages of Your Bank and of 

Your Number One Competitor?

In order to gain more insight into the priorities of 

banks of each size and the potentially different types 

of value they provide to their customers, the survey 

focused on how banks of both sizes view themselves 

and how other banks view them. The understanding 

that small banks are relationship lenders and large 

banks are transactional lenders could lead one to 

expect that each size has distinct advantages in small 

business lending. For example, small banks might 

be better at customer service and at customizing 

their approach for different customers, whereas 

large banks might offer more convenience and 

lower interest rates. The similarities discussed in the 

preceding section, however, allow the possibility that 

the two sizes of banks may in fact not have strongly 

distinct advantages. 

The survey asked banks to list both their own 

competitive advantages and the competitive 

advantages of their top competitor.41 In both cases, 

banks selected from a list of 18 possible advantages, 

and designated up to 3 as top three advantages.42 The 

results are broadly consistent with the findings of 

the previous subsection that, even for large banks, 

small business lending is rarely fully transactional. 

Figure 4.2 groups into six broad categories the 

individual advantages that banks selected, and shows 

that an overwhelming majority of both types of 

banks—86.5 percent of small banks and 83.5 percent 
32 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 4

Figure 4.2: Percentage of Banks That Consider Themselves to Have a Top Three Competitive 

Advantage in This Category

Source: SBLS Question 18.

Notes: Entries marked with a 

“w” indicate that the number of 

responses falls below the allowable 

reporting threshold for protecting 

respondents’ identities. At the 

statistical significance of 10 percent, 

“*” denotes that small banks are 

more likely than large banks to 

consider themselves to have a top 

three competitive advantage in this 

category; “+” denotes that large 

banks are more likely than small 

banks. Banks may select answers in 

multiple categories; results will not 

sum to 100.0 percent.

0.0

w 

53.1 +

24.3

24.3

83.5

2.2

2.2

22.5

35.2 *

56.6 *

86.5

0.0 20.0 40.0 60.0 80.0 100.0

Underwriting

Technology

Convenience

Pricing/Structure

Speed of Service

Customer Service

Small Large

Table 4.1: Percentage of Banks That Consider This Competitive Advantage One of Their Own Top 

Three

Category Advantage Small Banks Large Banks

Customer Service

Relationship 58.6 57.1

Personal attention 58.2* 42.7

Staff quality 29.6 32.5

Speed of Service Decision speed 48.6* 24.3

Funding speed 20.3 w

Pricing or Structure

Loan structure flexibility 24.7 20.3

Fees 8.0 w

Interest rates 4.3 w

Term 0.8 0.0

Convenience

Convenient location 11.0 16.3

Credit products 7.8 18.4+

Other services 5.4 24.5+

Number of locations 1.6 22.3+

Technology Mobile banking 1.8 w

Remote deposit 0.5 w

Underwriting

Collateral requirements 0.9 0.0

Debt service coverage 0.9 0.0

Loan-to-value 0.7 0.0

Source: SBLS Question 18.

Notes: Entries marked with a “w” indicate that the number of responses falls below the allowable reporting threshold for protecting 

respondents’ identities. At the statistical significance of 10 percent, “*” denotes that small banks are more likely than large banks 

to list this as a top three competitive advantage; “+” that large banks are more likely than small banks. Banks may select multiple 

answers; results will not sum to 100.0 percent.
 Small Business Lending Survey 33

Section 4

of large banks—list some aspect of customer service 

as one of their own top advantages. Table 4.1 breaks 

out the categories into their specific individual 

advantages and presents the proportion of small and 

large banks that selected each individual advantage 

as one of their top three. The table shows that a 

majority of both sizes of banks consider established 

relationships with their borrowers to be their most 

important competitive advantage (58.6 percent of 

small banks and 57.1 percent of large banks), making 

it the most commonly selected advantage for both 

groups. Further, there is a set of self-reported top 

advantages that are common to both small and large 

banks, mirroring the results from Section 4.1. After 

established relationships, three of the next four most 

common top advantages of small banks are also 

among the next four most common top advantages 

of large banks: personal attention from the bank, 

decision speed, and staff quality.43

Yet, while small banks and large banks both 

perceive their customer relationships to be their 

own most important advantage, their competitors 

are much more likely to view small banks as having 

superior customer service. Table 4.2 presents banks’ 

views of the top advantages for their number one 

competitor, be it a small bank, a large bank, or a 

credit union.44 The table shows that nearly half (47.5 

percent) of those who compete with small banks 

view customer relationships as one of small banks’ 

top advantages, compared with 16.2 percent of those 

who compete with large banks. Figure 4.3 shows that 

this pattern continues into the broader measures 

of advantage—the categories within which the 

individual advantages are grouped. The figure shows 

that a majority (58.8 percent) of the banks competing 

43 The fifth most common top advantage of small banks—loan structure flexibility—is the seventh most common for large banks, but 

the difference between small and large banks is small and statistically insignificant (24.7 percent of small banks compared with 

20.3 percent of large banks).The fourth most likely advantage for large banks is other services offered, and large banks are much 

more likely than small banks to list this as a top advantage (24.5 percent of large banks compared with 5.4 percent of small banks).

44 As shown in Section 3, almost all banks selected one of these organizations as their number one competitor. Banks that did not 

select one of these organizations as their number one competitor are excluded from this analysis.

45 As discussed in Stein, “Information Production,” both capital allocation and loan quality decisions are made locally at small 

banks, whereas at large banks capital allocation decisions are made at a distant central office, although loan quality is determined locally. The overall speed of small business loan decisions appears to be due partly to lack of distance between the 

officials who determine resource allocation and those who determine loan quality.

46 The 2016 Small Business Credit Survey found that small businesses cite long waits for loans as one of their most frequent issues when receiving bank loans. See Federal Reserve Bank of Cleveland, 2016 Small Business Credit Survey Report on Microbusinesses: Nonemployer and Small Employer Firms, November 2017, https://clevelandfed.org/global%20

with small banks consider them to have an aspect of 

customer service as a top advantage, compared with 

only 17.3 percent of those that compete with large 

banks. This suggests that small banks do have some 

advantages in relationship lending, consistent with 

the higher emphasis they place on the components of 

customer service relative to large banks, as shown in 

Section 4.1.

The clearest advantage of small banks, however, 

across both internal and external evaluations, is 

speed. Figure 4.2 shows that a majority of small 

banks (56.6 percent) consider an aspect of speed of 

service—either decision speed or funding speed—to 

be one of their own top three advantages, compared 

with slightly less than one-quarter of large banks 

(24.3 percent). Further, small banks are viewed as 

similarly advantaged by their competitors. Figure 4.3 

shows that over one-quarter (26.2 percent) of small 

banks’ competitors view speed as one of small banks’ 

top advantages, compared with only 7 percent of 

large banks’ competitors.

This speed advantage for small banks is particularly 

noteworthy because one might expect large banks, 

using quantitative data, to have a more standardized 

decisionmaking process resulting in quicker 

decisions. In practice, however, it appears that the 

flatter organizational structure of small banks, with 

fewer layers of management separating loan officers 

from bank owners, allows for faster decisionmaking 

and loan processing.45 The importance of this 

advantage should not be underestimated, because 

funding speed is often an important consideration 

for small business borrowers.46 This advantage also 

suggests, however, that if technological advances 
34 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 4

Figure 4.3: Percentage of Banks That Consider Their Number One Competitor to Have a Top Three 

Competitive Advantage in This Category

Source: SBLS Questions 16 and 17.

Notes: At the statistical significance 

of 10 percent, “*” denotes that small 

banks are more likely than large banks 

to be considered by their competitor 

banks to have a top three competitive 

advantage in this category; “+” that 

large banks are more likely than small 

banks. Banks may select answers in 

multiple categories; results will not 

sum to 100.0 percent.

11.6 +

15.8

7.0

69.9 +

70.5 +

17.3

5.5

12.7

26.2 *

51.2

52.4

58.8 *

0.0 20.0 40.0 60.0 80.0 100.0

Technology

Underwriting

Speed of Service

Pricing/Structure

Convenience

Customer Service

Number One Competitor Is a Small Bank (<$10 Billion)

Number One Competitor Is a Large Bank (=> $10 Billion)

Table 4.2: Percentage of Banks That Consider This Competitive Advantage One of Their Number One 

Competitor’s Top Three

Category Advantage

Top Competitor is a ...

Small Bank Large Bank Credit Union

Customer Service

Relationship 47.5* 16.2 w

Personal attention 26.1 w 0.0

Staff quality 12.1 w 0.0

Speed of Service Decision speed 21.7* 6.0 0.0

Funding speed 9.7* 5.0 0.0

Pricing or Structure

Loan structure flexibility 24.2 22.7 40.8φφ

Fees 7.0 6.5 13.1

Interest rates 29.6 59.3+ 85.1φφ

Term 8.0 22.6+ 39.1φφ

Convenience

Convenient location 25.9 28.2 w

Credit products 15.4 23.8+ w

Other services 15.8 21.7 w

Number of locations 17.8 33.7++ 17.7

Technology Mobile banking 3.5 7.7+ 0.0

Remote deposit 3.0 w 0.0

Underwriting

Collateral requirements 6.9 10.9 18.5φ

Debt service coverage 3.2 2.4 w

Loan-to-value 5.4 5.6 w

Source: SBLS Questions 16 and 17.

Notes: Entries marked with a “w” indicate that the number of responses falls below the allowable reporting threshold for protecting 

respondents’ identities. At the statistical significance of 10 percent, “*” denotes that small banks are more likely than large banks to 

be considered by their competitor banks to have this competitive advantage as one of their top three; “+” that large banks are more 

likely than small banks; “++” that large banks are more likely than both small banks and credit unions; “φ” that credit unions are more 

likely than small banks; “φφ” that credit unions are more likely than both small and large banks. Banks may select multiple answers; 

results will not sum to 100.0 percent.
 Small Business Lending Survey 35

Section 4

allow large banks or FinTech firms to increase 

their decision speed, small banks may face more 

competitive pressures in the future.

In contrast to small banks, large banks are viewed 

both internally and externally as offering greater 

convenience to their customers, with a broader 

range of services offered and a larger number of 

branches. Figure 4.2 shows that slightly more than 

half (53.1 percent) of large banks believe some 

form of convenience to be one of their own top 

advantages, compared with slightly less than a 

quarter (22.5 percent) of small banks. Similarly, 

Figure 4.3 shows that more than 70 percent of large 

banks’ competitors view them as having convenience 

advantages, compared with just over half (52.4 

percent) of small banks’ competitors. These 

convenience advantages include number of locations. 

Table 4.1 shows that 22.3 percent of large banks 

consider number of locations to be one of their own 

top three advantages, whereas the comparable figure 

for small banks is only 1.6 percent. Table 4.2 shows 

that 33.7 percent of large banks’ competitors view 

number of locations as one of large banks’ top three 

advantages, compared with 17.8 percent of small 

banks’ competitors for small banks’ advantages. 

This once again shows the importance of physical 

branches in small business lending. 

As for price advantages, evaluations vary depending 

on whether banks are rating themselves or whether 

competitors are rating them. Table 4.1 shows that 

very few banks of any size consider interest rates or 

fees to be one of their own top advantages. However, 

many banks do view interest rates as being a top 

advantage of their number one competitor. This is 

especially true for the competitors of large banks. As 

Table 4.2 shows, 59.3 percent of the competitors of 

large banks view interest rates as a top advantage of 

their large-bank competitor. By a large margin, this 

is the most common perceived top advantage for 

large banks, and large banks are twice as likely as 

small banks to be perceived as having this advantage. 

The frequency of this perception suggests that large 

banks do possess some advantages in pricing, but the 

evidence is surprisingly mixed, given the important 

search?q=2016+Small+Business+Survey%3A+Report+on+Microbusinesses%3A+Nonemployer+and+Small+Employer+Firms.+-

Published+November+2017.+Federal+Reserve+Bank+of+Cleveland.

role pricing usually plays in competitive markets.

As discussed in Section 3, few banks have a nonbank 

as their number one competitor. Nevertheless, it is 

possible to make some observations about banks’ 

perceptions of credit unions, for the latter are listed 

as the number one competitor by 4.5 percent of 

banks (overwhelmingly small banks). Table 4.2 

shows that the top perceived advantages of credit 

unions are pricing (85.1 percent) and, to a lesser 

extent, other elements of loan structure. This 

perception of advantages likely stems from the 

perceived tax-advantaged status of credit unions. 

Although pricing and loan structure are advantages 

more commonly associated with large banks rather 

than small banks, it appears that credit unions 

are more likely than large or small banks to be 

perceived as having advantages on these dimensions. 

Furthermore, despite their community focus and 

small average size, credit unions are viewed as 

having very different advantages from the ones small 

banks are perceived to have.

4.3 Conclusions

The survey finds that relationship lending practices 

are highly important for both small and large 

banks—a finding that suggests that small business 

lending is, to some extent, inherently relationship 

focused. With near universality, both small and large 

banks report using relationship lending practices, 

and they believe that their customer relationships, 

and their customer service in general, are among 

their top advantages. 

Small banks, however, appear to focus more heavily 

on these practices and are more likely to view them 

as their most important practices. Small banks are 

also more likely to be viewed by their competitors 

as having advantages in customer relationships 

and in customer service in general. In addition, 

small banks consistently perceive themselves and 

are perceived by others as having a significant 

advantage in decision and funding speed. Given that 

large banks are thought to make lending decisions 

based on evaluating quantifiable data against preset 
36 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 4

limits, one might assume that they would be able to 

analyze the data and come to decisions faster. Large 

banks’ advantage of relying on quantifiable data, 

however, is evidently less important than the flatter 

organizational structure of small banks, where fewer 

managerial layers separate loan officers from bank 

owners. The importance of this speed advantage may 

be considerable, for speed in decisionmaking and 

funding is one of the top concerns of small businesses.

Large banks, by contrast, provide more convenience, 

both by offering a greater variety of products and 

services and by having a larger number of branches. 

Branches are consistently shown to be among the 

most important advantages of large banks, with 

branch networks serving as small business lending 

hubs. The advantages large banks derive from these 

networks further emphasize the importance of 

physical presence and proximity in the practice of 

small business lending (as discussed in Section 3). 

Large banks are also viewed as being able to offer 

lower interest rates than their competitors, although 

large banks themselves do not view this as an 

important advantage.

Overall, the results of the survey confirm the widely 

held belief that small banks focus on relationship 

lending practices and view their relationships with 

their clients as essential to their business model. 

Somewhat contrary to expectations, however, large 

banks are also heavy users of relationship lending 

practices when lending to small businesses. But 

small banks are shown to focus more intensively 

on relationship lending than large banks do, and 

this finding suggests that small banks’ approach to 

small business lending is distinct from the approach 

of large banks. If that is the case, the decreasing 

number of small banks in the country may 

disadvantage the small businesses that prefer a less 

transactional approach.
 Small Business Lending Survey 37

SECTION 5. 

Loan Products and Underwriting 

Practices

47 See Berger et al., “Function Follow Form?,” for example.

48 A list of five products was provided; banks were also given a write-in option.

This section explores whether and to what extent 

the established view of small business lending—that 

small and large banks differ in their small business 

lending models—is supported by differences in loan 

products offered and approaches to underwriting. 

Understanding differences that may exist is a 

prerequisite for understanding how small businesses’ 

access to credit may be affected as the U.S. banking 

industry changes. For example, knowing whether 

large banks base extensions of credit on quantifiable 

information may be particularly important to startups and other small businesses that lack a long track 

record of performance.47 Therefore, to explore how 

small and large banks manage their small business 

lending, the survey asked about the small business 

loan products offered by banks and about banks’ 

underwriting practices. 

Specifically, the survey asked what loan products 

are offered by small and large banks; what needs 

these products meet; what underwriting criteria 

are evaluated; what collateral is accepted; for what 

reasons the bank is willing to make underwriting 

exceptions; does the bank require a minimum loan 

amount and use standardized loan products; and 

finally, does the bank lend to start-ups, and if so, 

does it underwrite such loans differently from loans 

made to established small businesses.

5.1 What Loan Products Does Your Bank 

Offer to Small Businesses? 

The survey examines whether the different small 

business lending models of small and large banks as 

suggested by the established view result in different 

loan products being offered by the two sizes of 

banks. For example, one result of large banks’ heavy 

reliance on quantifiable information may be that 

more large banks than small banks offer credit cards, 

which in turn could reduce the willingness of large 

banks to offer loans requiring greater staff input. 

Specifically, the survey asked banks what 

commercial and industrial loan products they 

offered to small businesses in 2015 and which of 

these were their top product by loan volume.48 The 

results show that there are few differences in the 

loan products that small and large banks offer to 

small businesses and that there are certain core loan 

products used by nearly all banks to extend such 

credit. The results also show, however, that the top 

products of small and large banks differ.

Figure 5.1, Panel A, shows that large majorities of 

both small and large banks are equally likely to 

offer the same loan products to small businesses, 

namely, lines of credit (94.6 percent and 97.9 

percent), amortizing term loans (91.1 percent and 

95.9 percent), and balloon term loans (84.5 percent 

and 79.0 percent). Although majorities of both small 

and large banks offer letters of credit, large banks 

are more likely to offer this product to their small 

business customers (73.2 percent for small banks, 

87.5 percent for large banks).

As expected, the most notable difference is in the 

share of small and large banks that offer credit cards 

to small businesses. Large banks are more than 

three times as likely as small banks to offer credit 

cards (68.8 percent and 21.0 percent), a finding that 

is consistent with the established understanding 

that large banks rely more on automation and 

predetermined limits in their decisionmaking about 

small business loans. The underwriting of credit cards 

typically uses quantifiable information (such as credit 

scores), which can be evaluated quickly and does not 
38 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 5

require interaction with bank staff or specialized 

information about the business or the local market. 

In identifying their top C&I loan product to small 

businesses, both small and large banks cite only 

one of three: amortizing term loans, balloon term 

loans, and lines of credit. Figure 5.1, Panel B, shows 

that small banks are equally likely to indicate any 

one of the three as their number one product by 

volume, with about a third of small banks citing 

each as their top one.49 Large banks, on the other 

hand, are more likely (52.0 percent) to indicate that 

lines of credit are their number one product by 

volume; amortizing term loans are a distant second 

(24.9 percent), and balloon term loans an even more 

49 The testing of differences between the shares of small banks indicating one of these three products over another as their number one loan product by volume did not reveal statistically significant differences.

50 There is no statistically significant difference between small and large banks in their likelihood of having amortizing term loans 

as their top product.

distant third (12.4 percent). Further, lines of credit 

are more likely to be the top product for a larger 

share of large banks than small banks (52.0 percent 

and 31.1 percent), while balloon term loans are the 

top product for a larger share of small banks (30.6 

percent and 12.4 percent).50

Overall, these results—that there are core loan 

products used by all banks to extend credit to small 

businesses but that the top products differ for the 

two types of banks—could imply either that the 

small businesses that borrow from one size bank 

have different needs from the small businesses that 

borrow from the other size bank, or that small and 

large banks have distinct advantages in providing 

Figure 5.1: Percentage of Banks That Offer This Loan Product to Small Businesses

Source: SBLS Question 19.

Notes: Entries marked with a “w” indicate that the number of responses falls below the allowable reporting threshold for 

protecting respondents’ identities. At the statistical significance of 10 percent, “*” denotes that small banks are more likely 

than large banks to offer this loan product to small businesses; “+” that large banks are more likely than small banks. In Panel A, 

banks may select multiple answers; results will not sum to 100.0 percent. In Panel B, banks were asked which is their number one 

product used by small businesses, by dollar volume of originations in 2015.

A. Offers Product B. Number One Product, by Dollar Volume

68.8 +

87.5 +

79.0

95.8

97.9

21.0

73.2

84.5

91.1

94.6

0.0 20.0 40.0 60.0 80.0 100.0

Credit Card

Letter of Credit

Balloon

Term Loan

Amortizing

Term Loan

Line of Credit

Small Large

w 

0.0

12.4

24.9

52.0 +

0.0

0.7

30.6 *

33.1

31.1

0.0 20.0 40.0 60.0 80.0 100.0

(Mark All That Apply) (Mark Only One)
 Small Business Lending Survey 39

Section 5

balloon term loans (small banks) or lines of credit 

(large banks).

5.2 For What Purposes Do Small 

Businesses Use These Products? 

Small businesses use credit to meet different 

needs. Some are longer term, such as equipment 

purchases, and others are shorter term, such as 

accounts receivable, and different loan products 

may be better suited for one purpose over another. 

Thus, the survey asked about the purposes for 

which the top loan products are used. While there 

is substantial overlap in the purposes for which 

all types of loans are extended, the results (see 

Figure 5.2) show that term loans (both amortizing 

and balloon) are most often extended for longerterm purchases of equipment or other fixed assets 

and that lines of credit are most often extended 

for shorter-term purposes. Because the findings 

reveal that small and large banks generally do not 

51 Statistically, the share of banks that report financing equipment/fixed assets with amortizing term loans is significantly higher 

than the share of banks that report any of the other three loan purposes, tested separately. This is true for both small banks 

and large banks. The number of large banks with balloon term loans as their top product fell below the threshold for protecting 

respondents’ identities, and therefore the difference between small and large banks could not be tested.

52 When lines of credit are a bank’s number one product, there are statistically significant differences among loan purposes except 

between working capital and inventory. 

differ much in the purposes for which specific loan 

products are extended, the results for small and 

large banks are combined here.

Specifically, almost all banks with amortizing 

or balloon term loans as their top product report 

that these loans are typically used to support the 

financing of longer-term asset purchases such 

as equipment (97.6 percent for amortizing term 

loans, 94.4 percent for balloon term loans).51 By 

contrast, about half, 56.9 percent, of banks with 

lines of credit as their top product see these loans 

as financing equipment purchases. Instead, lines 

of credit are more often used to finance day-today operations, such as accounts receivable (70.5 

percent), inventory (85.6 percent), and working 

capital (88.6 percent).52 These shares are between 

18 and 30 percentage points higher than for banks 

whose top product is either of the two types of term 

loans. While small sample sizes prohibit detailed 

comparisons between small and large banks split 

by top loan product for term loans, an analysis 

Figure 5.2: Percentage of Banks That Cite This as the Purpose for Which Their Number One Loan 

Product to Small Businesses Was Used 

(All Banks Combined)

Source: SBLS Question 22C.

Notes: At the statistical significance of 

10 percent, “Ϯ” denotes that amortizing 

term loans are more likely than balloon 

term loans and lines of credit to be 

used to purchase equipment/fixed 

assets, and more likely than balloon 

term loans to be used for working 

capital; “ϮϮ” that balloon term loans 

are more likely than lines of credit 

to be used to purchase equipment/

fixed assets; “ϮϮϮ” that lines of credit 

are more likely than amortizing and 

balloon term loans to be used for 

accounts receivable, inventory, and 

working capital. Banks may select 

multiple answers; results will not sum 

to 100.0 percent. 

88.6ϮϮϮ

85.6ϮϮϮ

56.9

70.5ϮϮϮ

61.9

56.2

94.4ϮϮ

38.7

70.3Ϯ

60.2

97.6Ϯ

39.5

0.0 20.0 40.0 60.0 80.0 100.0

Working Capital

Inventory

Equipment/Fixed Assets

Accounts Receivable

Amortizing Term Loans Balloon Term Loans Lines of Credit
40 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 5

(not shown) of the loan purposes for lines of credit 

shows that both small and large banks are more 

likely to use lines of credit for shorter-term purposes.

These results, coupled with the tendency of large 

banks to extend lines of credit more often than 

small banks do, suggest that small banks may play 

a larger role in financing long-term investments 

by small businesses. It is therefore possible that the 

continuing shift from small banks to large banks 

could pose problems for small businesses that are 

attempting to grow. 

5.3 Which Underwriting Criteria Are 

Used by Your Bank to Evaluate 

Small Business Borrowers?

The survey investigates differences in the 

underwriting criteria used by small and large 

banks because the established view implies 

separate approaches to small business lending. And 

differences in criteria may produce differences in 

access to loans. For example, if large banks satisfy 

their evaluation criteria by requiring standard 

information, some small businesses may find it 

harder than others to provide such information. 

Specifically, the survey asked banks to indicate 

how often they use specific underwriting criteria to 

evaluate small businesses for their top loan product.53

The results show that banks of all sizes assess a wide 

variety of underwriting criteria in evaluating small 

businesses for loans, and the set of criteria does 

not typically differ by bank size. Figure 5.3 shows 

that, for 11 of the 14 possible criteria provided by 

the survey, large majorities of both small and large 

banks “always” or “almost always” evaluate each 

criterion. The findings suggest that banks of all sizes 

use most of the quantifiable information available to 

them to evaluate the creditworthiness of their small 

business applicants. 

53 The survey asked whether the underwriting criteria they use are the same across the types of products they offer, even if the 

limits for approval are different. Majorities of both small and large banks (91.1 percent and 66.5 percent) say they use the same 

underwriting criteria across loan products. Since the same criteria are used across products, the discussion here of underwriting 

criteria combines answers across the three top loan products. Note, however, that although majorities of both small banks and 

large banks say they use the same underwriting criteria across products, the proportion of large banks doing so is considerably 

smaller than the proportion of small banks—a result implying that large banks are more likely to use different standards by product. 

54 Banks were offered eight collateral options, and were also given a write-in option.

However, some differences between small and large 

banks exist. Small banks are statistically more likely 

than large banks to evaluate traditional loan and 

owner characteristics, namely, loan debt-service 

coverage (95.7 percent and 78.5 percent), loan-tovalue (95.0 percent and 74.3 percent), owner net 

worth (93.2 percent and 82.9 percent), and owner 

debt-to-worth (70.0 percent and 57.5 percent). Large 

banks are more likely than small banks to evaluate 

personal guarantees (95.7 percent and 86.2 percent), 

owner credit score (91.6 percent and 79.2 percent), 

and business age (87.4 percent and 71.3 percent). The 

largest difference between small and large banks 

is in the use of business credit score. Whereas 64.1 

percent of large banks indicate that they always or 

almost always evaluate business credit score, only 

14.8 percent of small banks do. Further, business 

credit score is the criterion least often cited by small 

banks. Overall, these differences suggest that firms 

whose owners have a lower credit score and fewer 

outside resources, and firms that are younger, may 

be more likely to obtain funding at a small bank.

5.4 What Collateral Does Your Bank 

Accept from Small Businesses?

Another aspect of underwriting that may reflect 

the distinct approaches of small and large banks 

to small business lending is the collateral accepted. 

For example, the standardized approach of large 

banks may make them reluctant to lend against 

collateral whose value is not easily established or 

that is not easily sold. Differences, if any, in the 

types of collateral typically accepted will bear on 

the question of whether, as the local composition of 

banks changes, certain types of firms will have more 

trouble securing a small business loan. Thus, the 

survey asked banks to describe what collateral they 

commonly accept—or to indicate if they commonly 

accept no collateral—for their top loan product.54
 Small Business Lending Survey 41

Section 5

The results, which are reported in Figure 5.4, show 

that majorities of both small and large banks accept 

nearly all types of collateral. However, there are a 

few small statistical differences. Large banks are 

slightly more likely than small banks to accept 

business assets (97.9 percent and 93.3 percent). 

Small banks are more likely than large banks 

to accept real estate collateral, both commercial 

real estate (90.6 percent and 76.6 percent) and 

personal real estate (70.4 percent and 57.5 percent). 

The widespread acceptance of real estate–related 

collateral and the “localness” of small banks’ 

small business borrowers (discussed in Section 3) 

reinforce the notion that small banks are tied to the 

outcomes of their local communities. 

There is also one large difference: large banks are 

three times as likely as small banks to commonly 

accept no collateral for their small business loans 

(53.5 percent and 17.7 percent). This result is 

consistent with the expectation that small banks 

rely more heavily on collateral to mitigate the risk 

of lending to small businesses, since large banks are 

better able to mitigate risks by lending in multiple 

markets and making a high volume of loans. This 

result is also consistent with findings that large 

Figure 5.3: Percentage of Banks That “Always” or “Almost Always” Use This Underwriting 

Criterion to Evaluate Small Business Loan Applicants for Their Number One Loan 

Product to Small Businesses

Source: SBLS Question 22E.

Notes: At the statistical significance 

of 10 percent, “*” denotes that small 

banks are more likely than large banks 

to “always” or “almost always” use 

this underwriting criterion to evaluate 

loan applicants for their number one 

loan product to small businesses; “+” 

that large banks are more likely than 

small banks. Banks may select multiple 

answers; results will not sum to 100.0 

percent.

64.1 +

23.4

31.9

57.5

68.0

87.4 +

91.6 +

72.3

78.5

78.6

95.7 +

82.9

74.3

78.5

14.8

17.7

32.4

70.0 *

70.5

71.3

79.2

82.3

85.3

85.7

86.2

93.2 *

95.0 *

95.7 *

0.0 20.0 40.0 60.0 80.0 100.0

Business Credit Score

Other Guarantee

Sell Cycle

Owner Debt-to-Worth

Business Debt-to-Worth

Business Age

Owner/Guarantor

Credit Score

Business Cash/Liquidity

Business Global DSC

Owner Experience

Personal Guarantee

Owner Net Worth

Loan-to-Value Ratio

Loan Debt-Service

Coverage (DSC)

Small Large
42 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 5

Figure 5.4: Percentage of Banks That Commonly Accept This Collateral for Their Number One 

Loan Product to Small Businesses

Source: SBLS Question 22D.

Notes: At the statistical significance 

of 10 percent, “*” denotes that small 

banks are more likely than large banks 

to commonly accept this collateral for 

their number one loan product to small 

businesses; “+” that large banks are 

more likely than small banks. Banks 

may select multiple answers; results 

will not sum to 100.0 percent.

14.8

53.5 +

55.4

70.1

70.1

57.5

78.9

76.6

97.9 +

8.1

17.7

58.3

62.3

63.4

70.4 *

72.9

90.6 *

93.3

0.0 20.0 40.0 60.0 80.0 100.0

Other

No Security/Collateral

Required

Personal Assets

Cash/Liquid Assets,

Owner/Guarantor

Cash/Liquid Assets,

Business

Real Estate, Personal

Accounts

Receivable/Inventory

Real Estate,

Commercial

Business

Assets/Equipment

Small Large

Figure 5.5: Percentage of Banks That Cite This as a Typical Reason to Make Exceptions to Loan 

Policy for Their Number One Loan Product to Small Businesses

Source: SBLS Question 22F.

Notes: At the statistical significance 

of 10 percent, “*” denotes that small 

banks are more likely than large 

banks to cite this as a typical reason 

to make exceptions to loan policy for 

their number one loan product to small 

businesses; “+” that large banks are 

more likely than small banks. Banks 

may select multiple answers; results 

will not sum to 100.0 percent.

0.0

27.7

31.9

36.1

61.5

65.7

85.0

1.7

17.4

36.4

37.3

62.1

65.2

83.2

0.0 20.0 40.0 60.0 80.0 100.0

No Exceptions Allowed

Existing Competing Offers

Positive Borrower 

Business Prospects

Potential for Other Banking 

Relationships with Borrower

Existing Deposit Relationship

Existing Loan Relationship

Existing Loan & 

Deposit Relationship

Small Large
 Small Business Lending Survey 43

Section 5

banks are more likely to lend to large, mature firms, 

which typically have more established credit records.55

5.5 When Is Your Bank Willing to Make 

an Underwriting Exception for a 

Small Business? 

Under certain circumstances, banks may be willing 

to make exceptions to their internal underwriting 

policy. The use of exceptions, therefore, is another 

area in which small and large banks may have 

distinct approaches to small business lending. 

Small banks collect nonstandard data while 

regularly interacting with small firms, and this 

“soft” information may be used to grant exceptions 

to underwriting policy. In contrast, large banks’ 

reliance on standard information and predetermined 

thresholds makes it hard to predict a basis on which 

exceptions would be made. Thus, the survey asked 

banks to cite the circumstances under which they 

are willing to deviate from their usual underwriting 

practices.56 Perhaps surprisingly, both small and 

large banks reported that exceptions to underwriting 

policy are most likely considered because of a 

previous relationship with the small business 

borrower. Further, the results show that small and 

large banks have statistically equal percentages 

for each of the reasons for allowing exceptions to 

underwriting policy.

Figure 5.5 shows that large majorities of both small 

banks (83.2 percent) and large banks (85.0 percent) 

say that a combined existing loan and deposit 

relationship is a reason to make an exception to 

underwriting policy. In addition, about two-thirds 

of both small and large banks say that an existing 

loan relationship (65.2 percent and 65.7 percent) 

or an existing deposit relationship (62.1 percent 

and 61.5 percent) alone is a reason to make an 

exception. These findings, while consistent with 

55 See, for example, Haynes, Ou, and Berney, “Small Business Borrowing,” or Berger et al., “Function Follow Form?” 

56 Banks were provided with a list of eight possible options, and were also given a write-in option. Although large majorities of 

both small and large banks reported “Strong Mitigating Factors,” the option is dropped in this discussion because it was subsequently deemed to include almost all the other options.

57 Note, however, that the survey asked about reasons for exceptions rather than the frequency with which banks make exceptions.

58 Standardized loan products are ones in which the terms of the loans are preset and the criteria for suitability and approval are 

easily measurable and predetermined.

the expectations for small banks, are somewhat 

unexpected for large banks.57 Nonetheless, they 

suggest that maintaining relationships in conducting 

small business lending is important to both small 

and large banks. 

About one-third each of small and large banks also 

consider potential for other banking relationships 

with borrower (37.3 percent and 36.1 percent) 

and positive business prospects for the borrower 

(36.4 percent and 31.9 percent) as reasons for 

underwriting exceptions, and smaller shares take 

into account existing competing offers (17.4 percent 

and 27.7 percent). 

5.6 Does Your Bank Require Minimum 

Loan Amounts and Use Standardized 

Loan Products?

An important potential difference between small 

and large banks stemming from their distinct 

approaches is the way they manage loan requests 

from small businesses, and specifically whether 

they apply preset criteria. Two common preset 

criteria are a required minimum loan amount 

and the use of standardized loan products. Small 

banks’ use of nonstandard information may lead 

to greater flexibility and willingness to customize 

loans according to the individual needs of a small 

business. Large banks’ use of predominantly 

standard data may enable a high-volume, economiesof-scale model, with the fixed administrative costs 

of underwriting covered by the use of a required 

minimum loan amount or minimized by the use of 

standardized products that have a preset structure 

and preset offered terms. Therefore, the survey 

explores differences between small and large banks 

in the use of loan amount floors and standardized 

small business loan products.58 The results show that 

large banks are indeed more likely to use both.
44 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 5

Figure 5.6 shows the share of banks that require a 

minimum loan amount for their top loan product to 

small businesses. Only a small share (14.8 percent) of 

small banks require a minimum loan amount for their 

top loan product to small businesses, compared with 

a majority (69.8 percent) of large banks. This finding 

suggests that a small business needs to request a loan 

of a certain size at most large banks before the bank is 

willing to consider making a loan. The findings also 

support the view that small banks remain flexible 

when evaluating a potential small business borrower.

Figure 5.7 shows the share of banks that use 

standardized loan products. As expected, a majority 

of large banks (64.7 percent) use such products. While 

only a modest share (8.4 percent) of small banks use 

standardized products, within the group of small 

banks as a whole there are differences by size. In fact, 

the likelihood of using standardized loan products 

grows with size. Only 3.8 percent of banks with less 

than $250 million in assets use standardized loan 

products (not shown), but 11.6 percent of banks with 

assets between $250 million to $1 billion do, and 

Figure 5.7: Percentage of Banks That Use Standardized Small Business Loan Products

Source: SBLS Question 5.

Notes: At the statistical significance 

of 10 percent, “+” denotes that large 

banks are more likely than small banks 

to use standardized small business 

loan products.

8.4

64.7 +

0.0

20.0

40.0

60.0

80.0

100.0

Small Large

Figure 5.6: Percentage of Banks That Require a Minimum Loan Amount for Their Number One Loan 

Product to Small Businesses

Source: SBLS Question 22B.

Notes: At the statistical significance 

of 10 percent, “+” denotes that large 

banks are more likely than small banks 

to require a minimum loan amount for 

their number one loan product to small 

businesses.

14.8

69.8 +

0.0

20.0

40.0

60.0

80.0

100.0

Small Large
 Small Business Lending Survey 45

Section 5

27.3 percent of banks with assets between $1 billion 

and $10 billion do as well.59 The advantages to small 

businesses from using standardized loan products are 

that the underwriting can be quicker to process and 

the products can offer more competitive interest rates. 

The disadvantages are that only a subset of small 

businesses may be able to satisfy the standard criteria 

required to qualify for them, and the small businesses 

seeking the loans may prefer loan terms different 

from the ones offered. 

5.7 Does Your Bank Lend to Start-Ups, 

and if so, Do You Underwrite the 

Loans Differently from Loans for 

Established Small Businesses?

New small businesses—start-ups—are central to 

the concern about whether small and large banks’ 

distinct approaches to small business lending 

produce differences in access to small business 

loans. When start-ups survive, they create more 

net jobs in the United States than businesses of any 

other age group, and start-ups have higher rates 

of employment growth and productivity growth 

than older firms. The likelihood of their survival 

increases with their access to credit.60 Yet start-ups 

lack much of the standardized information used to 

underwrite loans, and therefore the nonstandard 

information used by small banks may be especially 

important for new firms’ access to bank credit. As 

59 These differences are statistically significant. 

60 On net job creation, see Tim J. Kane, “The Importance of Startups in Job Creation and Job Destruction,” Kauffman Foundation 

Research Series, Firm Formation and Economic Growth, July 2010, http://dx.doi.org/10.2139/ssrn.1646934. On employment 

growth, see John Haltiwanger, Ron S. Jarmin, and Javier Miranda, “Who Creates Jobs? Small versus Large versus Young,” 

Review of Economic and Statistics 95, no. 2 (2013): 347–61, https://doi.org/10.1162/REST_a_00288. On productivity growth, 

see Alon et al., “Older and Slower.” On the relationship between survival and access to credit, see Alicia M. Robb and David 

Robinson, “The Capital Structure Decision of New Firms,” Review of Financial Studies 27, no. 1 (2014): 153–79; Jeongsik J. Lee 

and Wei Zhang, “Financial Capital and Startup Survival,” Academy of Management Proceedings 2011, no. 1 (2017), https://doi.

org/10.5465/ambpp.2011.65869494; Traci Mach and John D. Wolken, “Examining the Impact of Credit Access on Small Firm 

Survivability,” Federal Reserve Board, Finance and Economics Discussion Series, Working Paper No. 35 (2011), http://dx.doi.

org/10.2139/ssrn.1956696; and Rebel A. Cole and Tatyana Sokolyk, “How Do Firms Choose Legal Form of Organization? Evidence 

from the Kauffman Firm Surveys,” Working Paper (July 16, 2018), https://ssrn.com/abstract=2028176. 

61 Again, see, for example, Haynes, Ou, and Berney, “Small Business Borrowing,” or Berger et al., “Function Follow Form?”

62 The survey finds that the median age under which both small and large banks state they define a start-up is two years. The mean 

age is also two years. However, small banks have slightly more variance across quartiles. Whereas large banks at the 25th and 

75th percentile consider businesses under two years of age to be a start-up, small banks at the 25th percentile consider businesses under one year of age to be a start-up, and those at the 75th percentile consider businesses under three years of age to be a 

start-up. (See SBLS Question 21a.) 

noted above, several studies conclude that large 

banks are less likely than small banks to lend to 

small, young firms, and more likely to lend to 

large, mature firms.61 To address the issue of how 

the growth in large banks’ share of bank assets 

might affect start-ups’ ability to access financing, 

the survey asked banks about their underwriting 

practices for loans to new small businesses.

Most banks define start-ups as younger than two 

years,62 and the survey finds that most banks 

make loans to start-ups. Figure 5.8 shows that 79 

percent of small banks and 73.2 percent of large 

banks make such loans. The statistically equal 

likelihood of small and large banks lending to startups is somewhat surprising, given the advantages 

that small banks are thought to have in using 

nonstandard information to overcome the data 

constraints of new businesses. However, a reported 

willingness to lend does not necessarily indicate the 

level of actual lending to start-ups.

To minimize the risk associated with lending to an 

untested new business, banks may require start-ups 

to meet additional underwriting criteria, and 

this requirement, in turn, may create substantial 

barriers to actually obtaining a loan. Thus, the 

survey asked banks an open-ended question to 

describe any differences between the underwriting 

criteria used for start-ups and those used for 

established small businesses.
46 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 5

Most banks underwrite loans to start-ups 

differently from how they underwrite other small 

business loans, but large banks are much more 

likely to do so than small banks. Figure 5.9 shows 

that less than 10 percent of large banks report 

using the same underwriting procedures for startups as for established small businesses, whereas 

a substantial share of small banks use the same 

procedures (38.8 percent).

Large banks are also much more likely than small 

banks to mention looking for guarantees as part 

of their additional underwriting process for startups. More than 80 percent of large banks say they 

Figure 5.8: Percentage of Banks That Make C&I Loans to Start-Up Small Businesses

Source: SBLS Question 21C.

Notes: At the statistical significance 

of 10 percent, small and large banks 

are equally likely to make C&I loans to 

start-up small businesses.

79.0

73.2

0.0

20.0

40.0

60.0

80.0

100.0

Small Large

Figure 5.9: Percentage of Banks That Underwrite Start-Up Small Businesses Differently from 

Established Small Businesses, Using a Practice in This Category

Source: SBLS Questions 21C1 and 

21C1a.

Notes: Entries marked with a “w” 

indicate that the number of responses 

falls below the allowable reporting 

threshold for protecting respondents’ 

identities. At the statistical 

significance of 10 percent,“*” denotes 

that small banks are more likely than 

large banks to underwrite start-up 

small businesses differently from 

established small businesses using this 

practice; “+” that large banks are more 

likely than small banks. Underwriting 

categories aggregate individual bank 

responses to an open-ended question; 

results will not sum to 100.0 percent. 

Although banks were asked this 

question only if they had responded 

“yes” to whether they underwrite 

start-up small businesses differently 

from established small businesses, the 

numbers reported in the figure show 

percentage shares for all banks.

w 

w 

17.2

20.0

60.3 +

80.2 +

8.5

9.4

17.9

18.0

8.2

14.3

26.7

38.8 *

0.0 20.0 40.0 60.0 80.0 100.0

Business

Characteristics

Additional

Documentation

Owner Characteristics

Personal/Third-Party

Guarantee

SBA Guarantee

Any Guarantee

Underwrites the Same

Small Large

Guarantees

Other
 Small Business Lending Survey 47

Section 5

explore some form of additional guarantee, including 

Small Business Administration (SBA) guarantees, 

compared with only 26.7 percent of small banks. 

Large banks show particular interest in SBA support, 

with 60.3 percent mentioning these programs as 

an additional criterion, compared with only 14.3 

percent of small banks.

In contrast, small banks describe using more 

diverse and generally “softer” additional criteria 

for underwriting start-ups. These include requiring 

additional documentation such as business plans 

(17.9 percent), or looking at business characteristics 

such as the start-up’s industry or the quality of its 

management (9.4 percent).63 Whereas small and 

large banks are equally likely (18.0 percent and 17.2 

percent) to describe aspects of owner characteristics 

in their additional criteria, small banks use a greater 

variety of terms in this category, such as education, 

training, or personal credit history.64 These 

differences between small and large banks suggest 

that small banks are more flexible in underwriting 

start-up loans.

5.8 Conclusions

This section investigates whether small and large 

banks differ in how they conduct their small 

business lending, and if they do differ, whether some 

small businesses are potentially better served by 

small banks. Inasmuch as some small banks have 

been shown to use a wider range of information 

to underwrite loans, one would expect that startups and less established small businesses are more 

likely to gain access to credit from these small 

banks. Although the survey results show differences 

between small and large banks that suggest the 

possibility that less established small businesses 

may benefit more from the approach used by small 

banks, the results also indicate a high degree of 

commonality between the approaches taken by the 

two sizes of banks. 

63 However, the significance of the difference between the shares of small and large banks that consider additional documentation or business characteristics cannot be reported, because the number of large banks doing so falls below the threshold for 

protecting respondents’ identities. 

64 This diversity mirrors the varied ways in which small banks describe their small business borrowers (as discussed in Section 2), 

and may reflect how small banks are more attuned to the local economic environment or to the individual borrower. 

The survey supports the understanding that small 

banks are relationship lenders and approach small 

business lending in a more flexible and customized, 

case-by-case way compared with large banks; and a 

result of this approach may be that less established 

firms are more likely to receive credit. Small 

banks are found less likely than large banks to use 

minimum loan amounts on their top products or 

to rely on standardized loan products. And small 

banks are more likely than large banks to accept real 

estate collateral, a practice that is consistent with 

small banks’ having a more intimate knowledge 

of their local communities. Further, small banks 

often lend to start-ups using the same underwriting 

criteria they use for established small businesses; 

alternatively, they often evaluate a wide set of 

additional information, including relationship-based 

soft information such as owner’s experience or the 

management team’s skills.

The survey also supports the understanding that 

large banks are transactional lenders and rely on 

standardization in their small business lending 

decisionmaking, thus facilitating a high-volume, 

economies-of-scale business model and perhaps 

screening for more established firms—the ones 

most likely to meet the standards and to have the 

quantifiable data to show that they do. Large banks 

are much more likely than small banks to evaluate 

business credit score, require minimum loan 

amounts, and use such standardized loan products 

as credit cards. Further, when large banks do lend 

to start-ups, the criteria they use are almost always 

different from the criteria they use for established 

small businesses, particularly with respect to 

requests for outside guarantees.

Yet, despite the findings suggesting that small and 

large banks use distinct models for small business 

lending, there are also notable areas of commonality. 

The most surprising commonality is that for 

both sizes of banks, existing relationships are a 
48 FEDERAL DEPOSIT INSURANCE CORPORATION

Section 5

dominant reason for allowing exceptions to loan 

policy. In addition, small and large banks generally 

offer the same types of loan products, use similar 

underwriting criteria to evaluate small business 

borrowers, and accept the same collateral, with a few 

exceptions. Thus, although small and large banks 

may approach small business lending using distinct 

business models, as seen in Section 4 and as shown 

here, the process appears to involve many common 

elements and be somewhat relational in nature for 

both small and large banks. 
 Small Business Lending Survey 49

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52 FEDERAL DEPOSIT INSURANCE CORPORATION

PAGE INTENTIONALLY LEFT BLANK
 Small Business Lending Survey 53

APPENDIX A. 

Survey Methodology

65 Some banks included in the Call Report and Summary of Deposits exclusively have branches in U.S. territories. 

66 The sixteen “banker’s banks” existing at the time were excluded from the universe. 

The data source for this report is the Small Business 

Lending Survey (SBLS), a newly-designed, large-scale, 

nationally-representative survey of small business 

lending practices in the banking industry. The Federal 

Deposit Insurance Corporation (FDIC) undertook 

this survey of banks in order to provide new insights 

into many aspects of small business lending for which 

information is not already collected, including how 

banks define small businesses, interact with their 

small business customers, perceive their competition, 

view the dimensions on which they compete for small 

business loans, and underwrite their loans, including 

loans to startups. Additionally, the SBLS was intended 

to cover small business lending at all banks and to 

explore differences across small and large banks.

The SBLS was developed by the FDIC in consultation 

with survey experts at the U.S. Census Bureau. 

Throughout 2015, the FDIC and the Census 

Bureau conducted three rounds of interviews with 

40 banking institutions of various sizes in both 

rural and urban areas in ten states during the 

survey development phase. The interviews were 

conducted to ensure that the survey questions were 

understood by bank personnel, that the information 

gleaned from the questions matched the intent of 

the researchers, and to ensure that the requested 

information could be provided by the respondents 

using a reasonable amount of bank resources. 

The survey was estimated to take 3 to 6 hours to 

complete, depending on the size and complexity 

of the respondent bank. In the first half of 2016, 

the Census Bureau tested the usability of the web 

interface used to administer the survey to ensure 

that it functioned as intended.

Data collection for the SBLS was conducted by 

Census Bureau between June 2016 and January 

2017. The data collection was conducted entirely 

online through the Census Bureau’s Centurion data 

collection website. The survey instrument can be 

found in Appendix C.

A.1 Sample Selection

The universe of banks covered by the SBLS was 

constructed using the December 2015 Report of 

Condition and Income (Call Report) and the June 

2014 Summary of Deposits (SOD) data. All banks 

that met the following criteria were included in the 

universe:

1. Present in both the December 2015 Call Report 

and the June 2014 SOD data.

2. Had at least one branch in a U.S. state or in the 

District of Columbia.65

3. Had positive total net outstanding loans.

4. Was a FDIC-insured institution.

5. Had positive core deposits.

6. Was a commercial bank, consumer bank, mutual 

savings bank, stock savings bank, mutual savings & loan, stock savings & loan, cooperative 

bank, credit card company, finance company, 

commercial credit company, agricultural credit 

company, or a leasing company.66

This resulted in a universe of 6,018 banks out of 

the 6,182 banks extant in the December 2015 Call 

Report. The universe was then stratified along two 

dimensions: 1. Total asset size, and 2. Whether 

the majority of the institution’s deposits were in 

branches located within a metropolitan statistical 

area (MSA). Combining these two dimensions 

created eight strata, the characteristics of which are 

summarized in Columns (1) through (3) of Table A.1. 

Column (4) gives the number of banks in the universe 

of each stratum.
54 FEDERAL DEPOSIT INSURANCE CORPORATION

Appendix A. Survey Methodology

Table A.1: Frame and Initial Sample, by Stratum

Stratum Assets

Deposits 

held in 

MSA

Universe

Initial 

Sample 

Size

Percent of 

Stratum in 

Sample

Adjusted 

Sample Size

Number of 

Respondents

Stratum 

Response rate

1 Less than 

$250M 

Over 50% 1,499 397 26.5% 388 227 58.5%

2 Under 50% 2,061 413 20.0% 407 253 62.2%

3 $250M to 

Less Than 

$1B

Over 50% 1,104 376 34.1% 369 214 58.0%

4 Under 50% 693 336 48.5% 333 194 58.3%

5 $1B to Less 

Than $10B

Over 50% 483 301 62.3% 291 181 62.2%

6 Under 50% 85 84 98.8% 83 53 63.9%

7 $10B to Less 

Than $50B Any 60 60 100% 58 34 58.6%

8 $50B or 

More Any 33 33 100% 32 18 56.3%

Total 6,018 2,000 33.2% 1,961 1,174 59.9%

67 “Disproportionate” indicates that probability of selection into the sample is different for banks in different stratum.

68 Power calculations estimate how many banks are required to sample in each strata in order to yield a desired level of precision.

69 A bank was considered to have responded to the survey if it gave a response to question 2, the first non-qualitative question in 

the main survey. See below for an analysis of question-by-question response rates.

70 See Sub-requirement F1-6.2b of U.S. Census Bureau Statistical Quality Standards.

The sampling methodology drew a disproportionate 

stratified random sample for Strata 1 through 

6 (covering all banks with less than $10 billion 

in assets) and a “certainty” sample for Strata 7 

and 8, which contain all the largest banks.67 This 

methodology was employed in order to ensure that 

the SBLS could produce accurate estimates for large 

banks. The sample sizes for Strata 1 through 6 were 

assigned based on power calculations conducted by 

the U.S. Census Bureau.68 The distribution of the 

initial sample of 2,000 banks is given in Column 

(5) of Table A.1. While the survey was conducted, 

39 banks that were initially included in the sample 

had closed, were uncontactable, or were found to be 

out of the scope of the survey because they had no 

branches in a state or in the District of Columbia. 

These institutions were removed from the sample for 

a final sample of 1,961 banks, as shown in Column 

(7) of Table A.1.

The banks selected in the sampling process were 

sent an advance contact letter and an initial survey 

request by mail, which introduced the study and 

outlined the procedures for logging on to the Census 

Bureau’s data collection website to respond to the 

survey. Sampled banks which did not respond 

within 45 days of the beginning of the response 

period received follow-up letters and telephone calls.

A.2 Survey Response Rate

Of the 1,961 banks present in the adjusted sample, 

1,174 (59.9 percent) responded to the survey.69 This 

response rate meets the Census Bureau’s standards 

for quality control.70 The response rates varied 

slightly between strata, ranging from 56.3 percent for 

Stratum 8 to 63.9 percent for Stratum 6 (see column 

9 of Table A.1). However, none of the differences 

in response rates between strata were statistically 

significant at the 10 percent confidence level.
 Small Business Lending Survey 55

Appendix A. Survey Methodology

The overall incidence of survey nonresponse meets 

the Census Bureau standards for quality control. 

While the response rate meets the Census Bureau’s 

standards, there may still be some concern about 

nonresponse bias. To address this concern, the 

banks in the adjusted sample were compared to 

the subset of banks that responded to the survey, 

based on information available in the Call Report 

and the SOD. Table A.2 shows how sample banks 

differed from respondent banks within each 

stratum based on 20 relevant characteristics. 

Overall, directly testing for significant differences 

between respondent and non-respondent banks 

in each stratum finds that only 22 out of 160 tests 

(13.8 percent) were significant at the 10 percent 

confidence level, only slightly greater than would be 

expected to be found by random chance. The most 

notable difference is that, in Strata 7 and 8, banks 

with more employees per $100 million in assets and 

that were specialized in commercial lending were 

more likely to respond to the survey.

Table A.2: Mean Values for Sample and Respondent Banks, by Stratum

Characteristics Stratum 1 Stratum 2 Stratum 3 Stratum 4

Resp Sample Sig Resp Sample Sig Resp Sample Sig Resp Sample Sig

Ln(assets) 4.7 4.7 4.5 4.5 6.1 6.1 + 6.1 6

Employees per $100M assets 24.2 24.5 24.1 24.5 22.4 24.8 24.1 24

Branches per $100M assets 2.4 2.4 3 2.9 1.5 1.5 1.9 1.9

Asset growth rate, 3yr 

annualized

3.2 3 2.5 2.7 7.6 7.2 4.5 4.8

Asset allocation (%)

...C&I loans 8.1 7.9 6.7 6.9 8.7 8.9 7.7 7.5

...CRE loans 17.7 17 8.6 9.1 23.5 22.7 16.2 16.1

... C&I and CRE loans 25.8 24.9 15.2 16 + 32.2 31.5 23.9 23.6

Market area population (%)

... in MSA 95.5 95 13.6 13.5 94.6 94 31.4 33.1

... in LMI census tract 24 25.4 16.1 16.3 27.3 26.6 19.5 18.8

... black non-Hispanic 9.1 9.4 6.7 6.3 9.6 10.2 7.6 7.5

... Hispanic 9.2 9.6 5.6 6.9 ** 13.3 12.9 6.9 7.6

... minority 23.9 24.6 15.5 16.5 30.2 30.1 18.5 19.3

% of deposits in MSA 

branches

97.2 96.7 3.7 3.8 93.3 92.8 12.3 12.2

Specialization (%)

Agriculture 18.9 18.6 52.6 50.9 4.2 3.8 26.3 27.3

Commercial 56.8 53.9 20.2 21.9 75.7 75.3 52.1 51.7

Mortgage 9.7 9.8 9.1 7.1 * 9.8 9.8 6.2 4.8

Headquarter location (%)

Midwest 8.8 9.3 2 2 21 20.6 10.8 9.6

Northeast 48 46.6 58.5 55 + 26.6 28.2 43.8 42

South 32.2 32.2 32.4 35.1 39.3 40.7 37.6 39.6

West 11 11.9 7.1 7.9 13.1 10.6 + 7.7 8.7

Notes: A “+” denotes statistical significance at 10 percent; “*” at 5 percent; “**” at 1 percent. Hypothesis tests compare 

differences between respondents and non-respondents.
56 FEDERAL DEPOSIT INSURANCE CORPORATION

Appendix A. Survey Methodology

Table A.2 (cont): Mean Values for Sample and Respondent Banks, by Stratum

Characteristics Strata 5 Strata 6 Strata 7 Strata 8

Resp Sample Sig Resp Sample Sig Resp Sample Sig Resp Sample Sig

Ln(assets) 7.8 7.7 7.5 7.5 9.9 10 11.9 12.1

Employees per $100M assets 17.5 18.7 + 21.3 21.7 14.9 12.9 * 12.5 10.9 *

Branches per $100M assets 1.1 1.2 * 1.6 1.7 * 0.8 0.7 + 0.6 0.5

Asset growth rate, 3yr 

annualized 10.9 10.8 8 8.3 14.5 13.4 7.9 6.6

Asset allocation (%)

...C&I loans 11.7 11.1 8.6 8.9 14.9 14 16.3 15.9

...CRE loans 22.3 21.6 18.5 18.9 15.7 14 8.5 6.8 *

... C&I and CRE loans 34 32.7 + 27.1 27.9 30.5 28 + 24.9 22.7

Market area population (%)

... in MSA 93.5 93.5 58.9 58.1 93.3 94.6 + 94.7 95.8 +

... in LMI census tract 26.1 26.2 22.8 22.2 28.6 28.2 30.6 31.8

... black non-Hispanic 9.5 9.7 6.2 7.5 11.7 10.5 11.1 11.1

... Hispanic 14.3 14.9 8.8 7.8 17 16.4 17 16.4

... minority 33.3 33.5 20.3 20.3 40 39.1 39 38.1

% of deposits in MSA 

branches 91.5 91.3 28.3 28.1 90.5 92.4 95.2 96.5 *

Specialization (%)

Agriculture 1.7 1 17 19.3 0 1.7 0 0

Commercial 85.1 84.9 69.8 68.7 85.3 70.7 ** 77.8 62.5 *

Mortgage 6.6 6.9 3.8 2.4 5.9 10.3 0 0

Headquarter location (%)

Midwest 27.6 24.7 26.9 22 21.2 24.6 11.1 18.8

Northeast 27.1 28.2 34.6 35.4 24.2 21.1 22.2 28.1

South 26.5 31.6 * 26.9 32.9 30.3 31.6 44.4 34.4

West 18.8 15.5 * 11.5 9.8 24.2 22.8 22.2 18.8

Notes: A “+” denotes statistical significance at 10 percent; “*” at 5 percent; “**” at 1 percent. Hypothesis tests compare 

differences between respondents and non-respondents.
 Small Business Lending Survey 57

Appendix A. Survey Methodology

A.3 Item Response Rate

In addition to the high survey response rate, most 

questions also exhibited a high item response 

rate, where item response rate is defined as the 

proportion of banks that were asked the question 

that actually answered the question. Figure A.1 

shows the overall unweighted item response rate by 

question.71,72 Item response rates were high across 

the board, with most questions having a response 

rate above 85 percent, meeting Census Bureau 

standards for quality control.73, 74

The exceptions are Question 14 (with response rates 

between roughly 40 and 60 percent, depending 

on sub-question), and Questions 25 and 26 (with 

response rates around 37 and 39 percent). Question 

14 is a relatively labor-intensive question requiring 

banks to be able to report outstanding loan balances 

by both loan balance and business size, and it is 

71 Note that not all banks were asked every question, as certain questions were triggered based on the bank’s stratum or its 

responses to other questions. See the survey instrument (Appendix C) for the skip patterns.

72 Based on their answers to the screener questions, many banks were only asked a subset of Questions 7 through 14.

73 Note that Questions 2 and 14b have 100 percent question response rates by construction, the former because failing to answer 

Question 2 meant that the bank was considered to be a survey non-respondent, and the latter because the information was filled 

in automatically from the Call Report.

74 See Sub-requirement F1-6.2b of U.S. Census Bureau Statistical Quality Standards.

possible that banks overestimated their capability 

to do so while answering screener Questions 6 and 

7. The low response rates for Questions 25 and 26, 

which are the last two questions of the survey, could 

reflect survey fatigue, or other unknown issues. 

Regardless, analysis of Questions 25 and 26 are not 

included in this report due to the low response rate.

Question response rates were generally stable across 

strata. Table A.3 gives the question response rate by 

both question and stratum. For Questions 1 through 

9 and 15 through 26, which were asked of all strata, 

the average question response rate ranged from 91 to 

95 percent across strata. For Questions 10 through 14 

response rates declined from around 70 percent for 

Strata 5 and 6 to 42 percent for Stratum 8. Question 

14 had a very low response rate among Strata 7 

and 8. For this reason, the extrapolations based on 

Question 14 are not calculated for these banks (see 

Section 2 and Appendix B).
58 FEDERAL DEPOSIT INSURANCE CORPORATION

Appendix A. Survey Methodology

Figure A.1: Response Rates, by Survey Question

38.9

37.1

92.6

92.9

98.6

98.8

99.0

99.0

98.9

96.0

93.9

76.9

89.3

92.2

92.9

93.5

91.5

94.0

94.0

60.6

59.1

59.1

59.1

50.00

47.0

40.9

39.4

54.5

56.1

56.1

51.52

58.7

60.3

61.2

60.3

87.1

87.5

82.6

79.0

87.9

90.4

90.7

94.0

98.1

98.9

98.4

99.1

99.0

99.4

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

Q26

Q25

Q24

Q23

Q22F

Q22E

Q22D

Q22C

Q22B1

Q22B

Q22A

Q21C1a

Q21C1

Q21C

Q21B

Q21A

Q20

Q19

Q18

Q17

Q16

Q15

Q14F4

Q14F3

Q14F2

Q14F1

Q14E4

Q14E3

Q14E2

Q14E1

Q14D4

Q14D3

Q14D2

Q14D1

Q14C4

Q14C3

Q14C2

Q14C1

Q14B4

Q14B3

Q14B2

Q14B1

Q13

Q12

Q11

Q10

Q9

Q8

Q7

Q6

Q5A

Q5

Q4A

Q4

Q3A

Q3

Q2

Q1

100.0

99.3

99.4

100.0

100.0

100.0

100.0

100.0

99.2
 Small Business Lending Survey 59

Appendix A. Survey Methodology

Table A.3: Response Rates, by Survey Question and Stratum

Survey Question

Stratum

1 2 3 4 5 6 7 8

Q1 98.2% 99.6% 99.1% 99.0% 100.0% 100.0% 100.0% 100.0%

Q2 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Q3 98.7% 99.2% 100.0% 99.0% 100.0% 100.0% 100.0% 100.0%

Q3A 94.9% 96.4% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Q4 98.2% 100.0% 98.6% 99.0% 100.0% 100.0% 97.1% 100.0%

Q4A 96.3% 95.2% 92.9% 100.0% 100.0% 100.0% 100.0% 100.0%

Q5 98.7% 99.2% 98.1% 99.0% 99.4% 100.0% 97.1% 100.0%

Q5A 100.0% 100.0% 93.1% 100.0% 100.0% 100.0% 100.0% 91.7%

Q6 93.4% 92.5% 93.0% 95.4% 95.6% 98.1% N/A N/A

Q7 89.4% 88.9% 91.6% 91.8% 92.8% 88.7% 97.1% 83.3%

Q8 87.7% 90.5% 91.2% 91.2% 91.8% 89.7% 96.4% 78.6%

Q9 84.5% 88.1% 88.1% 87.8% 90.4% 87.2% 96.4% 78.6%

Q10 N/A N/A N/A N/A 78.7% 89.5% 76.5% 62.5%

Q11 N/A N/A N/A N/A 100.0% 100.0% 66.7% 66.7%

Q12 N/A N/A N/A N/A 90.2% 82.1% 89.7% 69.2%

Q13 N/A N/A N/A N/A 89.5% 82.1% 86.2% 76.9%

Q14B1 N/A N/A N/A N/A 100.0% 100.0% 100.0% 100.0%

Q14B2 N/A N/A N/A N/A 100.0% 100.0% 100.0% 100.0%

Q14B3 N/A N/A N/A N/A 100.0% 100.0% 100.0% 100.0%

Q14B4 N/A N/A N/A N/A 100.0% 100.0% 100.0% 100.0%

Q14C1 N/A N/A N/A N/A 64.5% 65.0% 55.6% 14.3%

Q14C2 N/A N/A N/A N/A 65.8% 65.0% 55.6% 14.3%

Q14C3 N/A N/A N/A N/A 64.5% 65.0% 55.6% 14.3%

Q14C4 N/A N/A N/A N/A 61.8% 65.0% 55.6% 14.3%

Q14D1 N/A N/A N/A N/A 57.1% 60.0% 37.5% 16.7%

Q14D2 N/A N/A N/A N/A 64.3% 60.0% 37.5% 16.7%

Q14D3 N/A N/A N/A N/A 64.3% 60.0% 37.5% 16.7%

Q14D4 N/A N/A N/A N/A 61.9% 60.0% 37.5% 16.7%

Q14E1 N/A N/A N/A N/A 42.9% 40.0% 37.5% 16.7%

Q14E2 N/A N/A N/A N/A 45.2% 40.0% 37.5% 16.7%

Q14E3 N/A N/A N/A N/A 52.4% 50.0% 37.5% 16.7%

Q14E4 N/A N/A N/A N/A 57.1% 50.0% 37.5% 16.7%

Q14F1 N/A N/A N/A N/A 66.7% 60.0% 37.5% 33.3%

Q14F2 N/A N/A N/A N/A 66.7% 60.0% 37.5% 33.3%

Q14F3 N/A N/A N/A N/A 66.7% 60.0% 37.5% 33.3%

Q14F4 N/A N/A N/A N/A 69.0% 60.0% 37.5% 33.3%

Q15 91.6% 92.9% 96.3% 94.8% 93.9% 98.1% 91.2% 100.0%

Q16 91.6% 92.5% 96.3% 94.8% 93.9% 98.1% 91.2% 100.0%

Q17 90.3% 88.9% 93.9% 92.3% 91.2% 94.3% 91.2% 100.0%

Q18 92.1% 91.7% 95.8% 94.3% 93.4% 96.2% 91.2% 100.0%

Q19 91.2% 90.9% 95.3% 94.8% 92.3% 96.2% 91.2% 94.4%

Q20 89.9% 90.1% 94.9% 94.3% 91.2% 96.2% 88.2% 100.0%

Q21A 84.6% 86.6% 93.0% 92.3% 89.5% 92.5% 88.2% 100.0%
60 FEDERAL DEPOSIT INSURANCE CORPORATION

Appendix A. Survey Methodology

Table A.3: Response Rates, by Survey Question and Stratum

Survey Question

Stratum

1 2 3 4 5 6 7 8

Q21B 73.1% 71.1% 79.9% 81.4% 77.3% 90.6% 70.6% 88.9%

Q21C 92.5% 92.1% 96.3% 94.8% 93.4% 96.2% 91.2% 100.0%

Q21C1 100.0% 98.5% 100.0% 99.4% 100.0% 100.0% 100.0% 90.9%

Q21C1A 94.4% 91.8% 96.5% 95.8% 99.1% 97.3% 100.0% 100.0%

Q22A 99.0% 99.6% 99.0% 100.0% 98.8% 100.0% 100.0% 94.1%

Q22B 98.0% 99.1% 99.0% 100.0% 98.8% 100.0% 96.8% 94.1%

Q22B1 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Q22C 99.0% 99.1% 98.5% 99.5% 98.8% 100.0% 100.0% 94.1%

Q22D 99.0% 99.1% 98.5% 99.5% 98.8% 100.0% 100.0% 94.1%

Q22E 98.5% 99.1% 98.0% 99.5% 98.8% 100.0% 100.0% 94.1%

Q22F 98.0% 99.1% 98.0% 98.9% 98.8% 100.0% 100.0% 94.1%

Q23 91.2% 92.1% 95.3% 94.3% 91.2% 96.2% 91.2% 94.4%

Q24 90.7% 91.3% 94.9% 94.8% 91.2% 96.2% 91.2% 94.4%

Q25 34.8% 32.0% 34.1% 38.1% 35.9% 58.5% 55.9% 77.8%

Q26 38.3% 35.2% 34.6% 39.2% 37.0% 58.5% 55.9% 77.8%

Average question 

response rate 90.5% 90.7% 92.2% 92.8% 83.8% 84.5% 78.3% 72.2%

...excluding Survey 

Sections III and IV 90.5% 90.7% 92.2% 92.8% 92.1% 95.0% 93.0% 94.4%

...Survey Sections III 

and IV only NA NA NA NA 72.1% 69.7% 58.0% 41.6%

A.4 Analysis and Statistical Precision

In line with standard Census Bureau methodology 

for stratified random sampling, banks were assigned 

weights based on the inverse probability of selection 

in to the sample (with a slight correction due to the 

39 banks excluded from the sample), which were then 

adjusted for nonresponse. All results in this report use 

these weights in order to produce accurate estimates 

that reflect the universe of banks in each stratum.

Estimated differences discussed in this report are 

significant at the 10 percent level or greater. This 

indicates that, if small and large banks were in fact 

equally likely to respond in the same way to a given 

question, the probability of obtaining estimates 

with an observed difference or a larger difference 

would be no more than 10 percent. In many cases, 

differences were actually statistically significant at 

much higher levels of precision than 10 percent.

(con’t)
 Small Business Lending Survey 61

APPENDIX B. 

Extrapolated Outstanding C&I 

Lending to Small Businesses

B.1 Extrapolated C&I Lending to Small 

Businesses Originated at Amounts 

Greater Than $1 Million, by Banks 

with Assets of $1 Billion to Less 

Than $10 Billion

In the survey, banks with $1 billion in assets or 

more were asked to report their outstanding C&I 

loan dollars broken down by loan size and business 

gross annual revenue (GAR). This was used to 

extrapolate the lower bound amount of C&I lending 

with origination values of over $1 million that went 

to small businesses. First, total outstanding C&I 

lending with origination amounts of greater than 

$1 million was taken from the Call Report. This 

was then adjusted by the ratio of outstanding C&I 

lending with origination amounts greater than $1 

million that went to businesses with less than $1 

million in gross annual revenue, to total outstanding 

C&I lending with origination amounts greater than 

$1 million, which was calculated from the answers 

collected by the survey. For banks that use GAR 

limits to define small businesses, almost all consider 

businesses with less than $1 million in gross annual 

revenue to be small businesses (see Section 2.1). 

Due to sample size constraints, these calculations 

could only be done for banks with $1 billion to less 

than $10 billion in assets. A conservative estimate 

of the calculated ratio was used, specifically the 

lower bound of the 80 percent confidence interval 

estimated in the survey. The results are shown in 

Table B.1. Assuming that all businesses with less 

than $1 million in gross annual revenue are small 

businesses, these calculations suggest that, in Q4 

2015, there was at least $19.1 billion in outstanding 

small business C&I loan dollars that was not 

accounted for in the Call Report proxy due to being 

over $1 million at the time of origination.

Table B.1: Extrapolated Lower Bound, C&I Lending to Small Businesses Originated at Amounts 

Greater Than $1 Million

(Banks with Assets of $1 Billion to Less Than $10 Billion Only)

Bank Asset Size

Outstanding C&I Lending 

with Origination Amounts 

Greater than $1M ($ 

Billions)

Ratio of Outstanding C&I Lending with 

Origination Amounts Greater than $1M 

That Went to Businesses with Less Than 

$1M GAR, to Total C&I Lending with 

Origination Amounts Greater Than $1M 

Extrapolated Outstanding 

C&I Lending with Origination 

Amounts Greater Than $1M to 

Small Businesses ($ Billions)

Mean Ratio Lower Bound Ratio

$1B to Less Than $10B $132.5B 0.212 0.143

Total: $19.1B

Source: Call Report SBLS
62 FEDERAL DEPOSIT INSURANCE CORPORATION

Appendix B. Extrapolated Outstanding C&I Lending to Small Business

B.2 Extrapolated C&I Lending to Small 

Businesses Originated at Amounts 

Greater Than $1 Million, by Banks 

with Assets Below $1 Billion 

For banks with assets below $1 billion, the 

extrapolated lower bound of C&I lending 

originated at amounts greater than $1 million 

that were made to small businesses is based on the 

share of these banks that described themselves 

as making “largely all” of their loans to small 

businesses. As shown in Figure 2.5, 86.4 percent of 

banks with under $250 million in assets and 76.5 

percent of banks with $250 million to less than 

$1 billion in assets made largely all their loans to 

small businesses. Banks were then rank-ordered 

within the two asset size groups by Call Report 

C&I lending, and for each bank in the bottom 86.4 

or 76.5 percent, respectively, Call Report small 

business proxy C&I lending was compared to total 

C&I lending. For all such banks where proxy C&I 

lending was less than half of total C&I lending, the 

difference between half of total C&I lending and 

proxy amount of lending was summed together, as 

a conservative extrapolation of the understatement 

for the two asset size groups of banks. In many 

cases, no extra C&I lending was counted as small 

business lending, since banks’ proxy small business 

lending was already over 50 percent of their total 

C&I portfolio.

This highly conservative extrapolation assumes 

two very restrictive constraints (a) the banks which 

make largely all their loans to small businesses are 

the banks in each category which do the least C&I 

lending, and (b) banks which make largely all their 

loans to small businesses make only 50 percent of 

their loans to small businesses (unless they directly 

report a higher proportion in the small business 

C&I proxy). By this estimate, small business 

lending is underestimated by at least $60.2 million 

for banks with less than $250 million in assets and 

by at least $32.3 million for banks with between 

$250 million and $1 billion in assets.

75 Dollar amounts at origination is the dollar amount extended by the loan at the time of origination, while outstanding loan balances, which is what is collected by the Call Report, instead reflects the remaining balance still owed on a loan. While these two 

measures capture different concepts, at a given moment in time for the industry the total dollar amounts in aggregate are similar 

as loan dollars that are paid off by borrowers are likely extended again as new lending.

It should be noted that much larger understatements 

are generated for these-sized banks if instead the 

simple method of counting their entire C&I portfolio 

as small business lending is used, as discussed in 

Section 2.3. Applying the simple method to the 

bottom 86 percent of banks with assets of less than 

$250 million and the bottom 76 percent of banks 

with assets of between $250 million and $1 billion, 

when ranked by their total C&I lending, instead 

yields for Q4 2015 an additional $16.9 billion in C&I 

lending to small businesses in loans with origination 

amounts above $1 million. 

B.3 Extrapolated C&I Lending 

Collateralized by 1-4 Family 

Residences

The survey asked banks to report their total 

origination and renewal lending for C&I purposes 

as well as origination and renewal lending for C&I 

purposes that was primarily secured by 1-4 family 

residential properties (residentially-secured C&I). In 

order to extrapolate the lower bound total amount 

of outstanding residentially-secured C&I, the total 

amount of outstanding C&I lending in the Call 

Report was adjusted by the ratio of residentiallysecured C&I originations to non-residentiallysecured C&I originations calculated from the 

answers collected by the survey. This was done, first, 

because C&I lending collected by the Call Report by 

definition excludes any residentially-secured lending 

for C&I purposes (see the box in Section 2), and 

second, because the Call Report collects information 

on outstanding loan dollars, while the survey 

questions asked about origination dollars.75

A conservative estimate of the ratio of residentiallysecured to non-residentially-secured C&I lending 

was used in the extrapolation, specifically the lower 

bound of the 80 percent confidence interval estimated 

in the survey. These calculations were done separately 

for banks with less than $250 million in assets, banks 

with $250 million to $1 billion in assets, banks with 

$1 to $10 billion in assets, and banks with over $10 
 Small Business Lending Survey 63

Appendix B. Extrapolated Outstanding C&I Lending to Small Business

billion in assets. The results are shown in Table B.2. 

Assuming that all residentially-secured C&I loans are 

made to small businesses, these calculations suggest 

that, in Q4 2015, there was at least $18.3 billion in 

outstanding small business C&I lending that was not 

accounted for in the Call Report proxy due to being 

residentially-secured.

Table B.2: Extrapolated Lower Bound, C&I Lending Collateralized by 1-4 Family Residences

Bank Asset Size Outstanding C&I Lending 

($ Billions)

Ratio of Residentially-secured C&I Origination 

to Non-residentially-secured C&I Originations Extrapolated Outstanding 

Residentially-secured C&I 

Lending ($ Billions) Mean Ratio Lower Bound Ratio

Less than $250M $31.5B 0.173 0.139 $4.4B

$250M to Less 

Than $1B $77.3B 0.103 0.084 $6.5B

$1B to Less Than 

$10B $188.5B 0.032 0.025 $4.8B

$10 Billion or 

More $1,297B 0.010 0.002 $2.7B

Source: Call Report SBLS Total: $18.3B
64 FEDERAL DEPOSIT INSURANCE CORPORATION

PAGE INTENTIONALLY LEFT BLANK
 Small Business Lending Survey 65

APPENDIX C. 

Small Business Lending Survey 

1 For example, a C&I loan may be collateralized by a 1-4 family primary residence.

2 For example, a C&I loan may be collateralized by a 1-4 family primary residence.

The survey instrument begins on the following page.

[Screener] 

Screener1. For calendar year 2015, do your bank’s core data systems have the ability to retrieve the number 

and dollar volume of new loan originations and renewals, by purpose (e.g. Commercial & Industrial 

(C&I), Commercial Real Estate (CRE), or Consumer), separately from collateral?1

a. Yes

b. No

Screener2. For calendar year 2015, do your bank’s core data systems have the ability to retrieve the number 

and dollar volume of new loan originations and renewals, made to firms with $1 million or less in 

gross annual revenue? 

a. Yes

b. No

Screener3. For calendar year 2015, do your bank’s core data systems have the ability to retrieve the number 

and dollar volume of new loan originations and renewals, by firm gross annual revenue, for any 

sized firm? 

a. Yes

b. No

Screener4. For calendar year 2015, do your bank’s core data systems have the ability to retrieve the number 

and dollar volume of new loan originations and renewals, by commercial loan product type (e.g. 

lines of credit, term loans, etc.)? 

a. Yes

b. No

Screener5. As of Call Report date ______, do your bank’s core data systems have the ability to retrieve the 

number and dollar volume of outstanding loan balances, by purpose (e.g., C&I, CRE, or Consumer), 

separately from collateral?2

a. Yes

b. No

Screener6. As of Call Report date ______, do your bank’s core data systems have the ability to retrieve the 

number and dollar volume of outstanding loan balances, made to firms with $1 million or less in 

gross annual revenue? 

a. Yes

b. No

Screener7. As of Call Report date ______, do your bank’s core data systems have the ability to retrieve the 

number and dollar volume of outstanding loan balances, by firm gross annual revenue, for any 

sized firm? 

a. Yes

b. No
66 FEDERAL DEPOSIT INSURANCE CORPORATION

Appendix C. Small Business Lending Survey

[Programmer’s Note: Throughout the Survey, please show Section headers on each screen with related questions]

I. Small Business Borrowers at Your Bank, in Calendar Year 2015 

1. In your own words, please describe the general characteristics of the small business borrowers to which 

your bank lends, regardless of regulatory definitions for small businesses. (The purpose of this question is 

to compare how banks differ in what they consider to be small businesses.) 

____________________________________________________________________________

2. For calendar year 2015, do you consider largely all of the loans made by your bank for Commercial and 

Industrial (C&I) purposes to have been made to borrowers that you consider to be small businesses? 

a. Yes

b. No

3. Generally speaking, does your bank internally consider a level of gross annual revenue, regardless 

of regulatory definitions for small businesses, above which a business would NOT be considered a 

small business?

a. Yes

b. No

3A. [If Q3=Yes] What is this annual revenue benchmark above which a business is NOT considered a 

small business? $___,___,___.00

4. Generally speaking, does your bank consider an aggregate loan exposure above which the business 

being lent to would NOT be considered a small business?

a. Yes

b. No

4A. [If Q4=Yes] What is this aggregate loan exposure above which a business is NOT considered a 

small business? $___,___,___.00

5. Does your bank offer any loan products designed specifically for small businesses? Please do NOT 

include government-sponsored loan programs, such as Small Business Administration loans.

a. Yes

b. No, our bank does not offer any products that differentiate between small businesses and all businesses

5A. [If Q5=Yes] How many such small business-specific loan products does your bank offer? 

___________

[Programmer’s Note: Ask Q6 only if Bank is in Strata 1-6]

6. At the end of calendar year 2015, what was your bank’s “internal” (or “house”) loan exposure limit, as 

set by your bank’s Board of Directors? $___,___,___.003

3 Hover: If your bank uses different limits for different loan portfolios, please report the limit for C&I lending.
 Small Business Lending Survey 67

Appendix C. Small Business Lending Survey

II. Total Loan Originations at Your Bank in Calendar Year 2015 

7. In calendar year 2015, what were the total originations and renewal dollars committed to loans for ALL 

purposes, including all consumer loans and all commercial loans to businesses of all sizes? Please refer to 

the instruction box below, for detailed instructions on what lending to include.4

Loans for all purposes...

Include Lending Related to:

• Acquisition, Construction, and Development 

• Agricultural and Farm

• Commercial and Industrial (C&I) 

• Commercial Real Estate (CRE)

• Multi-family Real Estate 

• 1-4 Family Residential Properties

• Consumer-activity, including (and not limited to) Auto and Credit Cards 

Note:

• For renewals, include the whole amount of the renewal.

• For lines of credit, include the entire amount of the available line originated or renewed.

• Include non-portfolio loans that were originated for sale.

$___,___,___,___.00

4 Hover: Please note that we are asking for total origination and renewal dollars for ALL PURPOSES, not only for small business 

lending purposes. Note also that the figures requested are NOT currently reported on the Call Report. 
68 FEDERAL DEPOSIT INSURANCE CORPORATION

Appendix C. Small Business Lending Survey

III. Commercial and Industrial Loan Originations at Your Bank, in Calendar Year 2015

[Programmer’s Note: Ask Q8 only if Screener1=Yes]

8. In Question 7, your bank provided its total originations and renewal dollars committed to loans for ALL 

purposes. In calendar year 2015, what were the total originations and renewal dollars committed to loans 

for Commercial and Industrial (C&I) purposes, only? Please refer to the instruction box below, for 

detailed instructions on this Survey’s definition for C&I lending.5

For the purposes of this Survey, loans for commercial and industrial purposes are loans to fund 

C&I activity, regardless of the collateral used to secure the loan. Specifically, ...

Include:

• Unsecured C&I activity lending 

• C&I activity lending, primarily secured by commercial real estate, including both owner-occupied 

and non-owner occupied CRE 

• C&I activity lending, primarily secured by multi-family residential properties 

• C&I activity lending, primarily secured by 1-4 family residential properties

• C&I activity lending, primarily secured by non-real estate assets (e.g. secured by inventory)

Exclude:

• Lending for the improvement, purchase, or refinancing of commercial real estate, including both 

owner-occupied and non-owner-occupied

• Lending for the improvement, purchase, or refinancing of multi-family real estate 

• Lending for the purchase of 1-4 family residential properties by investors 

• All Agricultural lending 

$___,___,___,___.00

[Programmer’s Note: Ask Q9 only if Screener1=Yes]

9. In calendar year 2015, what were the total originations and renewal dollars committed to loans for 

Commercial and Industrial purposes, that were primarily secured by 1-4 family residential properties, 

only? Please refer to the instruction box below, for examples of loans to include.6

Examples of loans to Include:

• A line of credit to a business for working capital purposes, primarily secured by the primary residence of the owner.

• A loan to an established small business borrower to open a new business, primarily secured by the 

primary residence of the owner.

$___,___,___,___.00

5 Hover: Please note that the figures requested are NOT currently reported on the Call Report. 

6 Hover: Please note that the figures requested are NOT currently reported on the Call Report.
 Small Business Lending Survey 69

Appendix C. Small Business Lending Survey

[Programmer’s Note: Ask Q10 only if: 

Bank in Strata 5, 6, 7 or 8 AND Screener1=Yes and Screener2=Yes]

10. In calendar year 2015, what were the total originations and renewal dollars committed to loans for

Commercial and Industrial purposes, to businesses with gross annual revenues of $1 million or less, only?

Please refer to the instruction box below, for detailed instructions.7

For the purposes of this Survey, loans for commercial and industrial purposes are loans to fund 

C&I activity, regardless of the collateral used to secure the loan. Specifically, ...

Include:

• Unsecured C&I activity lending 

• C&I activity lending, primarily secured by commercial real estate, including both owner-occupied 

and non-owner occupied CRE 

• C&I activity lending, primarily secured by multi-family residential properties 

• C&I activity lending, primarily secured by 1-4 family residential properties

• C&I activity lending, primarily secured by non-real estate assets (e.g. secured by inventory)

Exclude:

• Lending for the improvement, purchase, or refinancing of commercial real estate, including both 

owner-occupied and non-owner-occupied

• Lending for the improvement, purchase, or refinancing of multi-family real estate 

• Lending for the purchase of 1-4 family residential properties by investors 

• All Agricultural lending 

$___,___,___,___.00

7 Hover: Please note that the figures requested are NOT currently reported on the Call Report.
70 FEDERAL DEPOSIT INSURANCE CORPORATION

Appendix C. Small Business Lending Survey

[Programmer’s Note: Ask Q11 only if Bank in Strata 5, 6, 7 or 8 

AND Screener1=Yes and Screener3=Yes and Q3=Yes

AND Q3A answered with a value, different from $1 million]

11. In calendar year 2015, what were the total originations and renewal dollars committed to loans for

Commercial and Industrial purposes, to businesses with gross annual revenues of [Insert value from 

Q3A] or less, only? Please refer to the instruction box below, for detailed instructions.8

For the purposes of this Survey, loans for commercial and industrial purposes are loans to fund C&I 

activity, regardless of the collateral used to secure the loan. Specifically, ...

Include:

• Unsecured C&I activity lending 

• C&I activity lending, secured by commercial real estate, including both owner-occupied and nonowner occupied CRE 

• C&I activity lending, secured by multi-family residential properties 

• C&I activity lending, secured by 1-4 family residential properties

• C&I activity lending, secured by non-real estate assets (e.g. secured by inventory)

Exclude:

• Lending for the improvement, purchase, or refinancing of commercial real estate, including both 

owner-occupied and non-owner-occupied

• Lending for the improvement, purchase, or refinancing of multi-family real estate 

• Lending for the purchase of 1-4 family residential properties by investors 

• All Agricultural lending 

$___,___,___,___.00

8 Hover: Please note that the figures requested are NOT currently reported on the Call Report.
 Small Business Lending Survey 71

Appendix C. Small Business Lending Survey

[Programmer’s Note: Section IV is asked only if bank in Strata 5, 6, 7 or 8]

IV. Outstanding Loans Reported on the Call Report, for Commercial & Industrial Activity

A. Loans for Commercial & Industrial Activity, Secured by 1-4 Family Residential Properties 

[Programmer’s Note: Ask Q12 only if Screener5=Yes]

12. Looking at the outstanding balances of [insert dollar amount]9 reported on your bank’s [insert date] Call 

Report for closed-end loans of all liens primarily secured by 1-4 Family Residential Properties, what was 

the total dollar amount that would have been classified as Commercial and Industrial (C&I) lending, 

had it not been primarily secured by the primary residence of the owner? Please refer to the instruction box 

below, for examples of loans to include.

Examples of loans to include:

• A line of credit to a business for working-capital purposes, secured by the primary residence of the 

owner.

• A loan to an established small business borrower to open a new business, secured by the primary 

residence of the owner.

$___,___,___,___.00

B. Loans for Commercial & Industrial Activity, Secured by Nonfarm Nonresidential Properties 

[Programmer’s Note: Ask Q13 only if Screener5=Yes]

13. Looking at the outstanding balances of [insert dollar amount]10 reported on your bank’s [insert date] Call 

Report for loans secured by owner-occupied and non-owner-occupied Nonfarm Nonresidential Properties (i.e. Commercial Real Estate), what was the total dollar amount that would have been classified as 

Commercial and Industrial lending, had it not been primarily secured by commercial real estate? Please 

refer to the instruction box below, for examples of loans to include and details on lending to exclude.

Examples of loans to include:

• A loan to a business for working capital purposes, secured by the premises of the business.

Exclude:

• Lending for the purchase, refinancing, or improvement of commercial real estate, both owneroccupied and non-owner-occupied

$___,___,___,___.00 

9 Info Box: This number comes from Call Report Schedule RC-C Part 1 and is the sum of Lines 1c(2)(a) and 1c(2)(b).

10 Info Box: This number comes from Call Report Schedule RC-C Part 1 and is the sum of Lines 1e(1) and 1e(2).
72 FEDERAL DEPOSIT INSURANCE CORPORATION

Appendix C. Small Business Lending Survey

[Programmer’s Note: Ask Q14 and include all columns only if Screener7=Yes.

Ask Q14 and include only columns (a), (b), and (c) only if Screener 6=Yes and Screener7=No]

C. Loans for Commercial and Industrial Activity, by Firm Size

14. Looking at the outstanding loan balances for Commercial and Industrial loans, reported on your bank’s 

[insert date] Call Report with origination amounts of various sizes, what was the total dollar amount of 

such loan balances to businesses with the following gross annual revenues?11 12 13 14 15

Call Report 

Loan Sizes

(a)

Call 

Report 

Figures

(b)

Dollar Amount of Loans Balances to Businesses 

with Annual Revenues of

Total

(f)

$1 Mill or less

(c)

Greater than $1 

Mill to less than 

$10 Mill

(d)

$10 Mill or 

more

(e)

$100k or less [insert 

Call dollar 

amount] 12

$__________ $__________ $__________ [Autocalculate: If 

Screener5=Yes, then 

sum Columns (c), (d), 

and (e)]

Greater than 

$100k up to 

$250k

[insert 

Call dollar 

amount] 13

$__________ $__________ $__________ [Autocalculate If 

Screener5=Yes, then 

sum Columns (c), (d), 

and (e)]

Greater than 

$250k up to 

$1 Mill

[insert 

Call dollar 

amount] 14

$__________ $__________ $__________ [Autocalculate: If 

Screener5=Yes, then 

sum Columns (c), (d), 

and (e)]

Greater than 

$1 Mill

(Note: 

Derived 

figure)

[insert 

derived 

dollar 

amount]15 

$__________ $__________ $__________ [Autocalculate If 

Screener5=Yes, then 

sum Columns (c), (d), 

and (e)]

[Programmer’s Note: 

Insert error flag if 

Column (b) does not 

match Column (f)]

11 Hover: Please use your best estimate of revenue available, for example, revenue collected at the time of loan origination.

12 Info Box: This number is from Call Report Schedule RC-C Part 2, Line 4a, Column B.

13 Info Box: This number is from Call Report Schedule RC-C Part 2, Line 4b, Column B.

14 Info Box: This number is from Call Report Schedule RC-C Part 2, Line 4c, Column B.

15 Info Box: This number is derived from Call Report Schedule RC-C and is Schedule RC-C Part 1, Line 4a less the sum of Call Report 

Schedule RC-C Part 2, Line 4a, Column B, Call Report Schedule RC-C Part 2, Line 4b, Column B, and Call Report Schedule RC-C 

Part 2, Line 4c, Column B.
 Small Business Lending Survey 73

Appendix C. Small Business Lending Survey

V. Small Business Commercial and Industrial Lending Competition, Practices, and Applications at 

Your Bank 

D. Small Business Commercial and Industrial Loan Competition in Your Market

15.A bank’s geographic market (or trade area) for commercial and industrial loans to small businesses is 

where the bank focuses its resources and outreach to generate such small business lending. What is your 

bank’s trade area or geographic market for commercial and industrial purpose loans to small businesses? 

Mark only one.

a. Only city/town where your bank’s headquarters are located

b. County or counties with branches 

c. County or counties with branches, and nearby (not necessarily contiguous) counties 

d. States in which branches are located

e. States in which branches are located, and nearby states 

f. Metropolitan Statistical Areas (MSAs) with branches 

g. Metropolitan Statistical Areas (MSAs) with branches, and nearby (not necessarily contiguous) counties 

h. Metropolitan Statistical Areas (MSAs) with branches, and nearby (not necessarily contiguous) 

MSAs 

i. National

j. Other ______________________ 

k. Other ______________________ 

l. Other ______________________ 
74 FEDERAL DEPOSIT INSURANCE CORPORATION

Appendix C. Small Business Lending Survey

16. Currently, which institutions do you compete with most frequently for your bank’s commercial and 

industrial lending to small businesses? 

Competitor Institutions for C&I Lending to 

Small Business Borrowers

(a)

Is this Institution 

a Competitor 

with Your Bank?

Mark all that 

apply.

(b)

Please 

Rank Your 

Bank’s Top 3 

Competitors 

(1=Top 

Competitor)

(c)

a. Small banks (Less than $1 Billion in Assets)

b. Mid-sized local banks with a physical presence in your 

market ($1 Billion to less than $10 Billion in Assets)

c. Mid-sized local banks with no physical presence in your 

market ($1 Billion to less than $10 Billion in Assets)

d. Regional (multi-state) banks with a physical presence in 

your market ($10 to less than $50 Billion in Assets)

e. Regional (multi-state) banks with no physical presence in 

your market ($10 to less than $50 Billion in Assets)

f. Large banks with a physical presence in your market 

($50+ Billion in Assets)

g. Large banks with no physical presence in your market 

($50+ Billion in Assets)

h. Credit unions

i. Non-bank local lenders

j. Non-bank online lenders, including marketplace lenders 

(e.g., OnDeck, Lending Club, Kabbage, etc.)

k. Crowd-funding sites 

(e.g., Kickstarter, Indiegogo, CircleUp, CrowdFunder, etc.)

l. Credit card issuers

m. Other ____________

n. Other ____________

o. Other ____________

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

Options:

1

2

3

[Programmer’s 

Note:

Only allow 

options that 

were selected in 

Column (b)]
 Small Business Lending Survey 75

Appendix C. Small Business Lending Survey

Competitive Advantages for C&I Lending to 

Small Business Borrowers 

(a)

Do [Most frequent 

competitor #1] 

Have this 

Competitive 

Advantage?

Mark all that apply.

(b)

What are 

the Top 3 

Competitive 

Advantages of 

[Most frequent 

competitor #1] ?

(c)

Convenience

a. Availability of credit products 

b. Availability of other services (e.g., deposit capabilities, 

remote products)

c. Convenient location for borrower

d. Number of locations

Customer Service

e. Established relationship with business banker/loan officer

f. Personal attention given by lender

g. Quality of staff (including experience and knowledge)

Pricing/Structure 

h. Fees 

i. Interest rates 

j. Term

k. Flexibility in pricing or loan structure

Speed of service

l. Closing/Funding speed

m. Decision speed

Technology 

n. Mobile banking 

o. Remote deposit capture

Underwriting criteria

p. Collateral requirements

q. Debt Service Coverage

r. Loan-to-Value

Other

s. Other ____________

t. Other ____________

u. Other ____________

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

[Programmer’s 

Note:

Only allow 

options that 

were selected in 

Column (b)]

17. In Question 16, your bank ranked its top three competitors. In relation to your bank, which of these 

forms of competition do you consider to be the competitive advantages of [Most frequent competitor, 

Ranked #1 in answer to Q16, Column (c)], the institution your bank ranked as its number 1 competitor, in 

competing against your bank for commercial and industrial lending to small businesses today? 
76 FEDERAL DEPOSIT INSURANCE CORPORATION

Appendix C. Small Business Lending Survey

18. In relation to your bank’s competitors, which of these forms of competition do you consider to be your 

bank’s competitive advantages today, in generating your bank’s commercial and industrial lending to 

small businesses? 

Competitive Advantages for C&I Lending to 

Small Business Borrowers

(a)

Does Your Bank Have this 

Competitive Advantage?

Mark all that apply.

(b)

What are Your Bank’s

Top 3 Competitive 

Advantages?

(c)

Convenience

a. Availability of credit products 

b. Availability of other services (e.g., deposit 

capabilities, remote products)

c. Convenient location for borrower

d. Number of locations

Customer Service

e. Established relationship with business 

banker/loan officer

f. Personal attention given by lender

g. Quality of staff (including experience and 

knowledge)

Pricing/Structure 

h. Fees 

i. Interest rates 

j. Term

k. Flexibility in pricing or loan structure

Speed of service

l. Closing/Funding speed

m. Decision speed

Technology 

n. Mobile banking 

o. Remote deposit capture

Underwriting criteria

p. Collateral requirements

q. Debt Service Coverage

r. Loan-to-Value

Other

s. Other ____________

t. Other ____________

u. Other ____________

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

[Programmer’s Note:

Only allow options 

that were selected in 

Column (b)]
 Small Business Lending Survey 77

Appendix C. Small Business Lending Survey

E. Commercial & Industrial Loan Products Offered to Small Businesses, by Your Bank

19. In calendar year 2015, did your bank offer any of the following commercial and industrial loan product 

types to potential borrowers that your bank considers to be small businesses? 16

Commercial & Industrial Loan Product 

Types Offered to Small Businesses

(a)

Did Your Bank Offer this 

C&I Loan Product? 

Mark all that apply.

(b)

Please Rank Your Bank’s 

Top 3 Loan Product 

Types, By Dollar Volume 

of Originations to Small 

Businesses, in 2015 

(1=Most)

(c)

a. Credit cards (as principal sponsor)16

b. Letters of credit

c. Lines of credit (LOC)

d. Term loans – balloon

e. Term loans – fully amortizing

f. Other ______________

g. Other ______________

h. Other ______________

o

o

o

o

o

o

o

o

Options:

1

2

3

[Programmer’s Note:

Only allow options that 

were selected in Column 

(b)] 

20.Does your bank use the same underwriting criteria for example, owner’s personal credit score, debt-service coverage, or loan-to-value ratio) across commercial and industrial loan products offered to small 

businesses, even if the thresholds for approval are different?17

a. Yes 

b. No

21. Please tell us more about any commercial and industrial lending that your bank may extend to small 

business startups.

18

21A. Below what age would a small business be considered a startup by your bank? _____

21B. In your own words, how does your bank define startups, other than by age? _____

21C. Does your bank make commercial and industrial loans to startups?

a. Yes 

b. No

16 Hover: The term ‘principal sponsor’ means that your bank is the sponsoring bank that directly handles card transactions on 

behalf of merchants.

17 Hover: By “threshold” we mean the acceptable level for an underwriting criterion, for example, “a maximum 75 percent loanto-value ratio.”  In this example, a differing threshold could be a “maximum 80 percent loan-to-value ratio” for a different C&I 

loan product. Another example could be requiring a minimum personal credit score of 650 for small business term loans but a 

minimum of 700 for a small business credit card.

18 Hover: Please note that by ‘startups’ we mean new operations, not new owners of existing businesses.
78 FEDERAL DEPOSIT INSURANCE CORPORATION

Appendix C. Small Business Lending Survey

21C1. [If Q21C=Yes] Does your bank underwrite startups differently from established small 

businesses for commercial and industrial lending? 

a. Yes 

b. No

21C1a. [If Q21C1=Yes] What additional underwriting criteria and/or processes does your 

bank apply in extending commercial and industrial credit to startups?__________

_______________________________________________________________

22.In Question 19, your bank ranked its top three loan products to small businesses. Please tell us more 

about your bank’s [Commercial loan product type, Ranked #1 in Q19 Column (c)], the loan product your 

bank ranked as its number 1 loan product to small businesses, for commercial and industrial purposes.

22A. Thinking about [Commercial loan product #1] for commercial and industrial purposes, how do you 

expect its volume of loans to small businesses to change in the next calendar year? Mark only one.

a. Increase

b. Stay the same

c. Decrease

22B. Is there a minimum allowable loan amount for [Commercial loan product #1] for commercial and 

industrial purposes, offered to small businesses?

a. Yes 

b. No

22B1. [If Q22B=Yes] What is the minimum loan amount allowed for [Commercial loan product #1] 

for commercial and industrial purposes, offered to small businesses? 

$____,____,____.00

22C. For what purposes are proceeds from [Commercial loan product #1] for commercial and industrial

lending typically used by small businesses? Mark all that apply

a. Accounts receivable 

b. Equipment, fixed assets, or leasehold improvements

c. Inventory

d. Working capital

e. Other ____________

f. Other ____________

g. Other ____________

22D. What collateral is commonly accepted used by small businesses for [Commercial loan product #1] 

for commercial and industrial purposes? Mark all that apply. 

a. No security/collateral required 

b. Secured by accounts receivable and/or inventory 

c. Secured by business assets and/or equipment 

d. Secured by cash or other liquid assets of business

e. Secured by cash or other liquid assets of owner of guarantor

f. Secured by commercial real estate (e.g., building, land)

g. Secured by personal assets, other than cash/liquid assets or personal real estate (e.g., 

marketable securities, vehicles)
 Small Business Lending Survey 79

Appendix C. Small Business Lending Survey

h. Secured by personal real estate

i. Secured by other collateral ____________

j. Secured by other collateral ____________

k. Secured by other collateral ____________

22E. How often does your bank use any of the following underwriting criteria to evaluate potential small 

business borrowers for [Commercial loan product #1] for commercial and industrial purposes?

Underwriting Criteria

How Often Does Your Bank Use 

This Practice? 

a. Loan debt service coverage

b. Business’ global debt service coverage 

c. Personal guarantee

d. Other guarantee offered

e. Business’ debt-to-worth 

f. Owners’ debt-to-worth 

g. Business’ cash/liquidity position

h. Owners’ overall financial strength/net worth 

i. Business’ credit score

j. Owners’ or guarantors’ personal credit score(s)

k. Loan-to-value ratio

l. Sell cycle for accounts receivable or inventory 

m. Business’ time in operation

n. Owners’ experience in industry

o. Other _____________

p. Other _____________

q. Other _____________

Options:

Always

Almost always

Sometimes

Almost never

Never

22F. What are typical reasons why exceptions from loan policy are allowed for potential small business

borrowers for [Commercial loan product #1] for commercial and industrial purposes?

Mark all that apply.

a. Existing competing offers 

b. Existing good customer deposit relationship

c. Existing good customer loan relationship

d. Existing good customer loan and deposit relationship, considered together

e. Positive business prospects for borrower

f. Potential for other new banking relationships with customer

g. Strong mitigating factors

h. Other _______________

i. Other _______________

j. Other _______________

k. No exceptions are allowed
80 FEDERAL DEPOSIT INSURANCE CORPORATION

Appendix C. Small Business Lending Survey

F. Small Business Commercial and Industrial Loan Applications, Activity, and Access, at Your Bank

23.Where can a potential borrower that your bank considers to be a small business apply for a commercial 

and industrial (C&I) loan from your bank? Mark all that apply.

a. Any branch

b. Branches with loan offices

c. Brokers (in-person or by telephone)

d. Follow-up call from bank, after customer inquiry

e. Online using bank’s own website

f. Online using third-party website

g. On-site visits to businesses by bank staff 

h. Main headquarters office 

i. Other ____________

j. Other ____________

k. Other ____________

[Programmer’s Note: Ask Q23A only if online options ‘e’ or ‘f’ selected in Q23]

23A. Does your bank accept online applications for commercial and industrial loans from all small 

business applicants? Mark only one.

a. Yes, from all applicants

b. No, from some applicants only 

c. No loan applications from small businesses are accepted online
 Small Business Lending Survey 81

Appendix C. Small Business Lending Survey

24.What practices does your bank currently use to generate new and maintain existing small business 

commercial and industrial loan relationships?

Practices to Generate Small Business C&I Lending Relationships 

(a)

Does Your Bank 

Engage in this 

Practice?

Mark all that 

apply.

(b)

What are the 

Top 3 Practices 

Used by Your 

Bank?

(c)

Convenience

a. Ability to talk to someone 

b. Accepting walk-ins

c. Branch network

d. Hours open

e. Non-bank locations of loan production offices

f. Online applications

External sources

g. Brokers

h. Indirect lending 

i. Lead generators

j. Referrals from customers, or “word of mouth”

k. Referrals from “centers of influence” (e.g. local attorneys, 

CPAs, and Chambers of Commerce)

Outreach/Strategy

l. Active marketing to customers from past or current 

banking relationships

m. Active marketing to customers not from past or current 

banking relationships

n. Community involvement and service (e.g. board 

participation, networking events, and other sponsorships)

o. Intentional personal contact from staff

p. Knowledgeable staff (e.g. business development specialists) 

Provision of Business Services

q. Card payment processing

r. Check cashing services

s. Payroll services or payroll cards

t. Transfer services

Other

u. Other ____________ 

v. Other ____________

w. Other ____________

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

o

[Programmer’s 

Note:

Only allow 

options that 

were selected in 

Column (b)]
82 FEDERAL DEPOSIT INSURANCE CORPORATION

Appendix C. Small Business Lending Survey

25.In calendar year 2015, in consultation with your bank’s loan officers, in situations where an inquiry from 

a small business did not lead to a commercial and industrial loan (for any reason), did your bank do any 

of the following? Mark all that apply. 

a. Offer business financial counseling, provided directly by bank staff

b. Place in contact with or share literature from third-party technical assistance providers 

c. Refer to another commercial loan product offered by the bank

d. Refer to consumer loan products offered by the bank (e.g. a HELOC or personal credit card)

e. Refer to an SBA or USDA-guaranteed product

f. Suggest that customer find an investor/partner, for a stronger equity/capital position

g. Suggest outside financial counseling (e.g. provided by professionals or by government authorities)

h. Other ____________

i. Other ____________

j. Other ____________

26.In calendar year 2015, what were the challenges that your bank faced in providing commercial and 

industrial loan credit to small businesses? 

Challenges to Providing C&I Loan Credit to Small Businesses

(a)

Did Your 

Bank Face this 

Challenge? Mark 

all that apply. 

(b)

What were 

the Top 3 

Challenges 

Faced by 

Your Bank?

(c)

a. Borrowers’ failure to meet underwriting criteria

b. Borrowers’ lack of experience in industry

c. Caps on guaranteed programs 

d. Competition

e. Lack of demand

f. Insufficient funding sources for bank

g. Staffing

h. Secondary market conditions

i. Other ____________

j. Other ____________

k. Other ____________

o

o

o

o

o

o

o

o

o

o

o

o

o

o

[Programmer’s 

Note:

Only allow 

options that 

were selected in 

Column (b)]

Federal Deposit Insurance Corporation

FDIC-035-2018 (Revised 12/2018)