Surviving the current economy is a daunting task. People are buckling down and learning how to save money for their future as well as for the current times. Coupon cutting and only buying items on sale can make a huge impact on a person’s bottom line. When we think of loans, we often dwell on mortgages due to the housing crisis that we are going through now. There are many different types of loans including personal loans, car loans and business loans, all of which have interest and fees, but can save a person or business from going under. All of these have been impacted by the current economy and we see slowing of lending in many sectors as money becomes hard to come by due to the many defaults we are seeing in the business world alone. A few years ago, business lending in general had slowed to a crawl as banks were afraid to lend money, but also knew that it would hurt their bottom line as far as interest income, which is crucial to a bank. Interest and fees make up a large part of their income and the slowing of lending truly had an impact on their profits. The government intervened and tried to spur lending, but it was slow as banks continued to be squeamish about lending in general.

Small businesses in general have been borrowing on a stable basis the last few years. In 2009-2010, they only were down about 1% over the past period while large business lending was down over 5% during that same period. Although we would like to see loans up, a 1% drop is only a blip on the radar and is encouraging news overall. Small business loans are defined as loans to business of less than $100,000. This is usually just enough to help a small business stay in business or expand slowly. It seems that smaller businesses may have a better grasp on what it will take to make it in an economy like ours, slow but stable expansion is good for all types of businesses, so this plan makes the most sense. There is no reason to overextend yourself in this climate as it could lead to eventual bankruptcy and default on any loans you may have outstanding, further sending the economy in a downward slope, which is exactly what we are trying to avoid at all costs.

Another fact that came out during this study is that smaller businesses are not only relying on smaller banks, but are also exploring the use of larger banks for their loans, which is very uncommon. Hopefully, this borrowing is a sign that the business world is starting to recover rather than using the loans for stability and they are using them to expand. Loans like these are good for that type of growth and for increasing overall inventory, which could mean that goods are being bought and possibly flying off of the shelves, which would be a huge improvement over the way it has been the past few years.