5th District Footprint

This issue of 5th District Footprint examines the percentage change in the number and total dollar value of small business loans originated in Fifth District counties in the years following the Great Recession — from 2010 to 2015 — by the location of the recipient small businesses. Small businesses are key contributors to the U.S. economy, particularly in terms of job creation. The Bureau of Labor Statistics estimates that nationally small businesses created 62.3 percent of net new jobs on average per quarter from 1992 to 2015.¹  However, small businesses frequently report that they face challenges in accessing capital, with 50 percent of employer small businesses reportedly receiving less than the full amount of financing for which they applied in 2015.²

Lending to small businesses is one of the ways that financial institutions can fulfill their Community Reinvestment Act (CRA) obligation to invest in their local communities.³  The Federal Financial Institutions Examination Council (FFIEC) collects data on small business lending by banks subject to CRA, which it then aggregates and releases annually.⁴  While this data only represents a portion of small business lending in the United States, it may yield insight into post-recession trends in small business access to capital.

Nationally, the number of small business loans originated by CRA-obligated banks increased 38.9 percent from 2010 to 2015 and the total dollar value increased 25.7 percent. The Fifth District states and the District of Columbia all experienced an increase in the number and total dollar value of small business loans from 2010 to 2015, although the magnitude of these increases varies. Maryland had the greatest increase in the number of small business loans (60.4 percent) and the District of Columbia had the greatest total dollar value increase (36.8 percent). West Virginia experienced the smallest percentage increases in loan number and total dollar value at 12.2 percent and 0.02 percent, respectively.

At the county level, more Fifth District counties experienced an increase in the number of small business loans rather than the total dollar value. While 88.9 percent of the 359 Fifth District counties had an increase in the number of loans, 68.2 percent experienced an increase in total dollar value. Eighty-one counties (22.6 percent) experienced an increase in the number of small business loans, but also a simultaneous decrease in the total dollar value. Of the 233 counties (64.9 percent) that had an increase in both the number and total dollar value of small business loans, Buckingham County, Virginia, experienced the greatest increases. From 2010 to 2015, the number of small business loans in Buckingham County increased 163.1 percent and the total dollar value increased 293.5 percent.

The number of small business loans originated in Fifth District counties in 2010 ranged from 13 loans (Wirt County, West Virginia) to 16,843 loans (Fairfax County, Virginia). This range expanded in 2015 as the minimum decreased to 10 loans (Wirt County, West Virginia) and the maximum increased to 28,813 loans (Fairfax County, Virginia). The median number of small business loans originated at the county level grew from 318 loans to 418 loans over the time period of interest.

In 2010, the average amount of a small business loan by county in the Fifth District ranged from $11,846 (Lee County, Virginia) to $97,459 (Waynesboro City, Virginia).⁵  By 2015, this range had declined with average loan amounts of $7,529 (Highland County, Virginia) to $88,781 (Gilmer County, West Virginia). From 2010 to 2015, 72.4 percent of Fifth District counties experienced a decrease in the average dollar amount of small business loans.