1. Claire J. Mezzanotte
Group Managing Director,
Global Structured Finance,
+1 212 806 3272
H
cmezzanotte@dbrs.com
Mike Babick
Senior Vice President, ABS
Structured Finance
+1 212 806 3229
mbabick@dbrs.com
Chris D’Onofrio
Senior Vice President, ABS
Structured Finance
+1 212 806 3284
cdonofrio@dbrs.com
Jayce Fox
Vice President, ABS
Structured Finance
+1 212 806 3261
Hjfox@dbrs.com
Lain Gutierrez
Senior Vice President, ABS
Structured Finance
+1 212 806 3922
lgutierrez@dbrs.com
Sergey Moiseenko
Senior Vice President, ABS
Structured Finance
+1 212 806 3225
smoiseenko@dbrs.com
Chris O’Connell
Senior Vice President, ABS
Structured Finance
+1 212 806 3253
coconnell@dbrs.com
Jon Riber
Senior Vice President, ABS
Structured Finance
+1 212 806 3250
Hjriber@dbrs.com
Quincy Tang
Managing Director, RMBS
Structured Finance
+1 212 806 3256
qtang@dbrs.com
Kathleen Tillwitz
Managing Director,
Operational Risk, ABS/RMBS
Structured Finance
+1 212 806 3265
H
ktillwitz@dbrs.com
Chuck Weilamann
Managing Director, ABS
Structured Finance
+1 212 806 3226
cweilamann@dbrs.com
U.S. BANKS STILL LEND SELECTIVELY SINCE THE GREAT RECESSION
After peaking at $1.25 trillion in 2008, commercial and industrial (C&I) loan volume for U.S.
banks declined significantly during the Great Recession, reaching a low point of $1.0 trillion
in September 2010, down over 20% from the peak. Since then, C&I loan volumes have
recovered to pre-recession levels, with over $1.54 trillion in total C&I loans outstanding as of
September 30, 2015. However, the post-recession C&I loan volume trends differ notably based
on loan size (see Chart 1 below). For the purposes of this discussion, DBRS refers to C&I
loans with greater than a $1 million balance as “Large” loans and C&I loans with smaller than
a $1 million balance as “Small” loans.
Despite cyclical volume declines in the last two recessions, Large loan volumes trended
upward over the 1995 to 2013 period. There were $1.23 trillion Large loans as of September
30, 2015, an increase of 34% over the earlier peak in 2008. Small loan volumes increased
from 1995 to 2008 with limited impact from the 2001 recession. However, Small loan
volumes declined during the Great Recession and have not rebounded since. There were
$312 billion of Small loans as of September 30, 2015, a 7% decrease from the earlier peak
in 2008. Moreover, since September 30, 2011, Large loan volumes have grown over 50%,
whereas Small loan volumes have grown less than 12%.
Chart 2 below details U.S. bank C&I loan volumes for three tiers of loan sizes: loans under
$100 thousand (<$100K), loans between $100 thousand and $250 thousand ($100K–$250K)
and loans between $250 thousand and $1 million ($250K–$1MM). These three Small loan
tiers experienced growth from 1995–2008, a decline from 2008–2011, little change from
2011–2013, and modest growth in more recent quarters. Since September 30, 2011, loans of
$250K–$1MM have grown 10%, loans of $100K–$250K have grown 7%, and loans of
<$100K have grown 14%.
Volume 11, Issue 2, January 11, 2016

2. Nevertheless, using 2008 as a benchmark, volumes for Small loans have not yet recovered to
their pre-recessionary levels (see Chart 3 below). While the >$1MM loan tier has increased by
34% when compared with the 2008 peak, the <$100K, $100K–$250K and $250K–$1MM loan
tiers are down 4%, 12% and 8%, respectively.
The percentage of U.S. firms applying for credit was 22% in 2014, down from 37% in 2013,
according to the Joint Small Business Credit Survey Report prepared by the Federal Reserve
Banks of New York, Atlanta, Cleveland and Philadelphia. Approximately 58% of firms did
not apply for credit (versus 45% in 2013), and 20% of firms were discouraged from applying
at all, up 2% from 2013. That leaves 22% that did apply for credit, of which 56% received less
than 50% of their requested amount or were denied credit entirely (up from 43% in 2013).
Although small business bank lending has increased over the last four years by approximately
$28 billion, it remains approximately $25 billion below peak 2008 levels. Yet Small loans
make up the majority of credit applications, with 73% of all credit applications being for
amounts under $250K.
Small business borrowers will likely continue to look for alternative funding from a variety of
“Shadow Banking” sources, including factoring, asset-based lending, specialty finance lenders
and merchant cash advances. Marketplace lenders have also started filling in the credit gap in
the small business lending arena, with 18% of all credit applications made in 2014 processed

3. by online lenders (most recent data available). Armed with proprietary scorecards that use
non-traditional data to determine creditworthiness, marketplace lenders believe they are better
equipped to understand the small business lending market than more traditional lenders. DBRS
expects marketplace lenders to experience continued volume growth in the small business
lending segment as this nascent industry matures.
For questions or comments, please contact Maxim Berger at mberger@dbrs.com.
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