The Analysis On Small Business Lending Availability In The US

Based on modern financial theories, this paper gives a descriptive research on small business lending in the US. The empirical studies of the American scholars borne out the advantages of small banks in small business lending and reasons were given by various scholars. The author of this paper holds the same views. From a relationship lending perspective, as banks need to collect, report, and process the "soft information" of small firms, decentralized small banks with relatively simple organizational structures perform better. What's more, lending officers grasping soft information have more saying in the decision-making process in small banks. From an agency cost perspective, it costs big banks more and leads to organizational diseconomy to collect soft information needed to serve small business. From a bank-firm distance perspective, usually small banks are nearer to their small clients, so they have a better access to some soft information.In the context of the merge and acquisition of the banking industry, most small banks got expanded. How did it influence the small business lending? The result has to do with a series of factors including the profile of the M&A participants, types of M&A, technology developments, the post-M&A market structure, the response of the none participants, etc. Small business lending availability is actually a gamble with the banks. Where there is competition, the small business lending needs will be met or partially met. The degree to which these needs are to be met depends on the market power of the two sides.Community banks in the US caught the world attention in serving small business. This might provide some references to China on a macro level. Community banks' advantages in lending to small firms include their good access to information, localized business goal, promptness and the support from government.Apart from the quality of the small firms and the balanced structure of the banking industry, there are two other elements that lead to the US small business's good luck in getting loans from the banks:a well-functioning government and a well-established credit system. The US government offers loan guarantee programs and ensures and safeguards the small business's rights through laws and regulations. Every citizen has a credit record that is filed. And honesty has never gone out of the core American value. Hence, there is a good environment for people to raise people's awareness of credit.In China, medium business actually has less or few difficulties in getting loans from the banks, but small business are incredibly unlucky in this respect. Although the small firms have their innate problems, there are a lot of other reasons, such as, the banking system, government's support, guarantee system, credit reporting system, taxation, macro policies, etc.. After analyzing all of these factors, this paper comes to the resolution part. The following suggestions are given:1, establishing our own community banks; 2, developing a multi-level, well-balanced banking system in which small banks are the majority, big banks are assistants; commercial banking plays the main role and policy banking the supporting role; grassroots financing is legitimized and micro financing works as an extra hand; 3, facilitating the guarantee system; 4, enhancing people's awareness of integrity and improving the credit system.