Published by Woodstock Institute | April 2017
Small, local businesses create economic opportunity within neighborhoods, increase local employment opportunities, and generate higher levels of income growth within neighborhoods. For small neighborhood businesses to grow, they need access to capital. Bank loans to businesses are an important element for success because businesses that have access to adequate levels of capital grow more rapidly, hire more workers, and make more investments than businesses that do not have access. Since the Great Recession, mainstream financial institutions have reduced their small businesses lending, leading some businesses to resort to alternative, non-bank financial technology (fintech) lenders for needed capital. While small businesses could potentially benefit from having an additional source of capital that fintech lenders provide, many of those new lenders only provide loans with exceedingly high interest rates, onerous terms, and relatively poor customer service.
This report examines bank lending to businesses in the Buffalo, New York, and New Brunswick, New Jersey, regions. The purpose is to determine the extent to which banks are meeting the credit needs of businesses throughout those two regions. The focus of the report is on the smaller value loans under $100,000 that are most likely to support smaller, local businesses that provide employment and wealth-building opportunities for local residents.
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