Looking for a Bank Loan? Don't Forget About the Little Guys

Trying to get a business loan from a bank? Don’t skip over the little guys in your quest for capital.

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Loans at smaller banks grew at a 6 percent annualized rate in the second quarter of 2013, according to a recent report on the lending activity of banks in the U.S. That’s three times the annualized growth rate recorded for the nation’s 25 largest banks, which stood at 2 percent, according to the report by New York-based financial-services firm Keefe, Bruyette and Woods. Loans are measured by dollar volume rather than the number of loans made.

Lending growth was across almost all loan categories, with particular strength in both business and consumer lending, the KBW report says. Because the increased lending at small banks is “broad-based suggests it may be sustainable,” the report says.

Possible reasons for the increased lending activity include lower levels of regulation at smaller banks than at their larger counterparts, recent movement of lending staffers from large banks to small banks and an increased willingness of smaller banks to take on credit and interest risk, the report says.  

Related: 10 Questions to Ask Before Applying for a Bank Loan