Small Business Lending Survey

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With more than 2.2 million operating in the state of Florida, small businesses are an important part of our state’s economy and local communities, making their health integral to a growing economy. Unfortunately, the small business community continues to struggle with an access to capital problem, which prevents them from obtaining the necessary means to establish, operate, or expand.

The primary lenders to small businesses are community banks and credit unions, which make nearly 40 percent of loans to small businesses nationwide, despite the fact that these small lenders comprise only ten percent of the assets in the entire financial industry. To further investigate the state’s small business access to capital problem, the Florida Chamber Foundation, in collaboration with Chief Financial Officer Jeff Atwater, conducted a survey of Florida-based community banks and credit unions to better understand the strategic challenges they face and how this may be impacting small business lending throughout the Sunshine State.

The survey results were overwhelming. Facing a plethora of new federal regulations and the rising cost of compliance, Florida-based community banks and credit unions are being squeezed from every direction. This is making it much more difficult to engage in a high volume of small business lending – a cornerstone of their operations and overall mission.

  • Regulatory compliance is the chief strategic challenge for community banks and credit unions headquartered in Florida. Ninety-five percent of respondents said that “meeting regulatory compliance requirements” will be a significant or moderate strategic challenge over the next three years.
  • Ninety-six percent of community banks and credit unions expect to spend considerably more time and money on compliance with new federal regulations over the next three years. Only 17 percent of respondents expected to spend considerably more on new state regulations.
  • A majority – 64 percent – of community banks and credit unions said small business lending over the next three years will be negatively affected by the Dodd-Frank Act. Further, 72 percent said that the availability of customer services would be negatively impacted by the Dodd-Frank Act in the near future.

According to the survey results, new federal regulation is significantly and negatively impacting many of Florida’s community banks and credit unions. The results suggest that new federal regulations are imposing costly burdens and unprecedented uncertainty on the primary lenders to small businesses. Further, survey respondents suggest that the Dodd-Frank Act is negatively impacting the state’s small business lending community, whose institutions were certainly not the intended target of these reforms. The data suggests that these barriers may be negatively affecting small business lending and, ultimately, the state’s economic recovery. A more thorough analysis of the secondary effects of recent financial regulation on community banks and credit unions may be warranted.