The problem with more small-business lending as a creator of jobs

The growth of small and microbusiness lending remained positive during the first half of 2008, although the expansion was slower than in the previous year, according to the latest edition of the Office of Advocacy’s annual study of lending to small firms. This new report, Small Business and Micro Business Lending in the United States for Data Years 2007-2008, gives a detailed account of small business lending overall, plus state-by-state totals and totals for individual lenders.

Summer Plum owns a small business — a one-woman tea and massage company in Charlotte, N.C. And the last year has been tough for her. She's glad the federal government is talking about dedicating $50 billion for loans to small businesses. She just has one condition: Force the banks to lend the money. She lives in Bank of America's hometown, but experience has taught her that banks aren't too interested in trying to help small-business owners.

Michael Shedlock submits: Here is a pair of interesting articles on CNN Money about Small Business lending.January 4, 2010: Small business lending begins to rebound The Small Business Administration's flagship lending program backed 37% more loans in its latest quarter than it did a year ago, at the height of the financial crisis.

Felix Salmon submits: Are legal payday lenders a superior alternative to the loan sharks of old? Or are they the loan sharks of old? Just look at what happened in New Mexico, which tried to crack down on payday lenders by limiting the amount of money a company could charge in interest on a short-maturity loan.

The growth of small and microbusiness lending remained positive during the first half of 2008, although the expansion was slower than in the previous year, according to the latest edition of the Office of Advocacy’s annual study of lending to small firms. This new report, Small Business and Micro Business Lending in the United States for Data Years 2007-2008, gives a detailed account of small business lending overall, plus state-by-state totals and totals for individual lenders.

Felix Salmon submits: Lending to small businesses is often a spectacularly good way of creating jobs — and almost always creates more jobs per dollar spent than any kind of infrastructure investment.

William Kabourek submits:Jobs, Jobs, Jobs is the new mantra. One conventional way to create jobs is to foster a healthier small business climate as it is accepted that job growth begins with mom and pop companies.

Community banks may soon be able tap a $30 billion government fund to help them increase lending to small businesses. Democrats in Congress said the banks should be able to use the money to leverage up to $300 billion in loans to small businesses, helping to loosen tight credit markets.