According to a survey by the National Federation of Independent Business, reports that only 50% of the small businesses have borrowed to meet their business needs.
The freezing of lending, started with the start of recession, in 2007. According to Federal Reserve’s Survey of quarterly Senior Loan Officer Opinion, states that in October 2008 the percentage of large lenders, who have tightened the loan standards for small businesses is 84%. It was found that due to freezing of lending small businesses suffered the most.
As per congressional Oversight Panel Report, in 2009, the loan portfolios of small-businesses in big banks, dropped by 9% (the drop is supposed to be more than double the 4.1% for the entire lending portfolios). In small banks, the portfolios for small-business lending fell by 2.7%, while the overall portfolios fell by 0.2%.
The reasons for this problem were that most of the government programs created to facilitate lending to small businesses were focussed on SBA loans, which constitute only to 10% of total lending by banks to small businesses.
As a measure to improve lending banks are government are trying to avoid mistakes that lead to subprime melt down. And also President Obama had advised the banks to give further look before rejecting the loan applications.