Bank Regulators Again Urge Small Business Loans

Features Reuters

WASHINGTON (Reuters) - U.S. regulators on Friday again reminded banks that they should extend loans to creditworthy small businesses.

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In an interagency statement, regulators said supervisors will not criticize banks for extending such loans, as long as they have done a thorough review of the small business's financial condition.

Banks have argued that they are getting mixed messages with supervisors telling them to build their capital positions and policymakers telling them to increase lending.

"Regulators are mindful of the harmful economic effects of an excessive tightening of credit availability in a downturn and are working...to ensure that supervisory policies and actions do not inadvertently curtail the availability of credit to sound small business borrowers," the statement said.

President Barack Obama, looking for ways to drive down high U.S. unemployment, has been zeroing in on expanding credit for small businesses, a main source of job creation in the United States.

Obama is meeting with small business owners in suburban Maryland on Friday and later will announce plans to ask Congress to temporarily expand credit through two Small Business Administration programs, a White House official said.

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