##trants, a substantial share of which were community banks. 16 small business access to credit at the federal reserve, we view small business credit from several perspectives. for the economy, small businesses need adequate and affordable credit in order to form, grow, and succeed ; otherwise they may underperform, slowing growth and employment. for many small business owners, personal and business finances are intertwined. a well - functioning housing finance market is vital for small business owners who may draw upon the equity in their homes to fund their businesses. student loans may be needed to help fund the education that is important for both small business owners and their employees to boost profits and productivity. and, short - term credit matters for day - to - day management of cash flow, while longer - term credit is essential for capital investments. so, entrepreneurs — just like consumers — need access to a variety of credit sources. recently, i had the pleasure of meeting a group of small businesses from across the country. by “ small, ” i mean some of these companies have just a handful of employees. the group included owners of a catering company from dallas, a mechanical engineering company from philadelphia, a marketing consulting firm from cleveland, a combination bar and bakery from 3 / 7 bis central bankers'speeches brooklyn, and a gluten - free bakery from my hometown, salt lake city. they shared with me the joys of running their own businesses, of creating jobs, and of providing for their families as well as creating opportunities for their employees. they also spoke of their challenges, which i ’ m sure are familiar to many of you in this room. for one, the owners wear many hats, including ceo, chief operating officer, chief finance officer, head of sales and marketing, and some — quite literally — chief bottle washer. they also spoke of the day - to - day difficulties of finding, training, and retaining employees. and, they raised the challenges they often face in gaining access to working capital, the lifeblood to sustaining and growing their businesses. the anecdotes i heard touched on three related trends we have been observing in the small business credit environment. first, although lending standards have eased since the recession and the financial condition of businesses has improved, some small business credit needs, especially for the smallest of firms and minority small business owners, continue to go unmet. according to a 2016 small business credit survey conducted by our 12 federal reserve banks, some small businesses still face persistent credit gaps,

. several of the businesses i met with mentioned they had turned to nonbank online lenders after being turned down by banks. some online lenders obtain access to a prospective borrower ’ s accounting software, merchant accounts, shipping, and payroll data in real time in order to underwrite businesses. business owners can receive funds in a couple of days or even hours. this emergence of online lenders is part of a broader evolution of financial technology — or “ fintech " — as seen in a wide range of products and services for both consumers and small 4 / 7 bis central bankers'speeches businesses. i ’ m not surprised to see this important topic on your conference agenda. the use of fintech to expand access to credit has great promise and also associated risks. for example, online origination platforms and more sophisticated algorithms may enable credit to be underwritten and delivered in a manner that is still prudent but with greater efficiency, convenience, and lower processing costs. and as regulators, we do not want to unnecessarily restrict innovations that can benefit consumers and small businesses. at the same time, our interest is in ensuring that banks understand and manage their risks when introducing new technologies or partnering with fintech companies, and that consumers and small businesses remain protected. 23 this is why the federal reserve has been engaged in a broad and multidisciplinary effort to develop a robust understanding of the technologies and activities in this space, in order to study fintech ’ s opportunities and risks, and assess policy and supervisory implications. 24 fintech is also one of the factors driving calls for regulators to modernize the community reinvestment act, or cra, as technology changes how financial products and services are accessed. as i ’ m sure most of you know, the cra is an important law that recognizes banks ’ affirmative obligation to meet the credit needs of the communities they serve, including low - and moderate - income communities. the cra promotes financial inclusion by encouraging banks to extend mortgages, small business loans, and other types of credit as well as to provide investments and other services in communities where they take deposits, consistent with safe and sound banking operations. the arrival of new financial technologies, along with significant industry consolidation and other structural changes, has changed the way that financial services are delivered to consumers and the ways in which banks lend in communities. we continue to study these shifts, and share the common goal of improving the current supervisory and regulatory framework for cra to further the