The biggest banks in the U.S. are making far fewer loans to small businesses than they did a decade ago, ceding market share to alternative lenders that charge significantly higher rates. Banks of all sizes held $598 billion in small loans to businesses as of Sept. 30, according to the Federal Deposit Insurance Corp., down nearly 16% from a peak of $711 billion in 2008. By contrast, loans to larger companies increased 37% during that time. The largest banks “have essentially abandoned the small business market,” said Mr. Cole, who analyzed bank regulatory filings for The Wall Street Journal. The analysis looked at loans of up to $1 million, adjusting for bank mergers and acquisitions. Weak...
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