The 22 banks that got the most funding from the Troubled Asset Relief Program decreased their lending to small businesses by a total of $10.5 billion over the past two quarters, according to a Treasury Department report released Monday.
Total small business lending by the bailed-out banks fell 4 percent over the last six months, the report said. Average total loan balances fell from $269 billion in April to $259 billion in September.
Of the 22 banks, three make no small business loans at all, and 15 more have reduced their small business loans since April, the first month the Treasury Department required individual banks that receive TARP assistance to report lending figures.
Total lending by major TARP recipients has fallen as well. The report noted that total average loan balances fell from $4.35 trillion in April to $4.18 trillion in September. Average total loan balances have fallen by about 1 percent each month since then, with a $28 billion drop between August and September.
Analysts say that the long-term squeeze on small business credit may be driving increases in unemployment. The unemployment rate increased to 10.2 percent in October from 9.8 percent in September.
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