The total number and value of small-business and small-farm loans made by financial institutions subject to the Community Reinvestment Act declined in 2023 compared to the previous year, the Federal Reserve, FDIC and Office of the Comptroller of the Currency said in their annual report on CRA lending data.
A total of 721 lenders reported data about originations and purchases of small loans — $1 million or less — to businesses and farms in 2023, according to the joint agency report. The agencies noted that CRA data provides a useful snapshot of lending to small businesses and small farms but it is not comprehensive. “Depository institutions that do not report CRA data and nonbank financial institutions not covered by the CRA, such as commercial finance companies, also extend such loans,” they said.
About 8.4 million small-business loans totaling nearly $261.7 billion were reported in 2023. The total number of loans decreased by 5.2% from 2022 while the number of loans originated fell by 5.1%. The dollar amount of small business loans originated declined by 8.9%. As for small-farm loans, the number of originations decreased by about 5.6% and the dollar amount decreased by 5.2%.
“The decrease in lending is likely due, at least in part, to rising interest rates and tighter lending standards,” the agencies said.
The agencies also examined community development lending among the 639 institutions that reported activity in that area. Lenders with assets that met or exceeded the mandatory reporting threshold — $1.503 billion in 2023 — extended the vast majority of reported community development loans, reporting a combined total of over $126 billion, or a 16% decrease from 2022, according to the report.
