Quotes from Ben Bernanke, Federal Reserve Chairman, regarding small business lending during his whistle stop tour of the U.S. economy, as reported by Business Week:

“Our collective challenge is to help ensure that creditworthy borrowers have access to credit so that, should they choose, they can expand their businesses or increase payrolls, helping our economy to recover,” Bernanke said at the event at the Chicago Fed’s Detroit branch.

…

Outstanding loans to small businesses have declined to about $660 billion in the first quarter of this year from almost $700 billion two years ago, Bernanke said. It’s “difficult to answer” how much of the drop comes from declining demand and how much from supply, he said.

…

Bernanke said he would offer “a little bit of guarded optimism” on lending.

…

“We’ve still got a long way to go but I’m hopeful that we’ll see improved conditions for credit going forward,” he said. “The Federal Reserve views this as being absolutely central to the recovery.”

…

Bernanke said the central bank is training its bank examiners and giving them the “message that encouraging lending to small businesses that are well positioned to repay is positive, not negative, for the safety and soundness of our banking system.”

 

And they all lived happily ever after!  But seriously, this raises a big question on my mind that could tell us if we are inching forward or not.   What do you think?

Is the economy held back because banks won’t lend?

Or are banks unable to lend because small to medium sized businesses just really don’t need additional capital? 

Full Business Week article:

http://www.businessweek.com/news/2010-06-03/bernanke-says-u-s-unemployment-imposes-heavy-costs-update1-.html

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