Summary of Article:

With over $30b of funds available, only $11.8b was applied for with $4b distributed. Out of that $4b, only half was loaned out to small businesses. Approval rates have also dropped and most banks used the funds to repay TARP loans. 

What I get out of this article is that despite money being available, there’s nobody worthy to lend to because the underlying economy is not picking up.

And according to Biz2Credit.com, a leading index for small business loans, the low approval rates for small business loans are due to these reasons:

1.         More than 73% of small businesses reported declining sales in first 7 months of 2011.

2.         Profitability has declined at more than 90% of small businesses over the past 2 years.

3.         Bank underwriting criteria is harder now than in 2010 when stimulus money was flowing. (source)

 

Even though the government is pushing hard on the economy with monetary policy i.e. Bernanke’s Twist and Geithner’s ‘No Lehman in Europe’, what if underlying economy just doesn’t seem to be growing? Are we only experiencing an European problem or is it larger than that?

http://online.wsj.com/article/SB10001424052970204138204576603100469929700.html