by Calculated Risk on 5/28/2010 05:20:00 PM

There have been numerous reports of less small business lending. But it is unclear if this is because a lack of credit, or if the lower level of lending is because of less demand. A survey by the Atlanta Fed suggests that it is mostly a demand problem (especially excluding construction and real estate industries).

From Atlanta Fed senior economist Paula Tkac: How "discouraged" are small businesses? Insights from an Atlanta Fed small business lending survey

We at the Federal Reserve Bank of Atlanta have ... begun a series of small business credit surveys. Leveraging the contacts in our Regional Economic Information Network (REIN), we polled 311 small businesses in the states of the Sixth District (Alabama, Florida, Georgia, Louisiana, Mississippi and Tennessee) on their credit experiences and future plans. While the survey is not a stratified random sample and so should not be viewed as a statistical representation of small business firms in the Sixth District, we believe the results are informative.

Indeed, the results of our April 2010 survey suggest that demand-side factors may be the driving force behind lower levels of small business credit. To be sure, when asked about the recent obstacles to accessing credit, some firms (34 firms, or 11 percent of our sample) cited banks' unwillingness to lend, but many more firms cited factors that may reflect low credit quality on the part of prospective borrowers. For example, 32 percent of firms cited a decline in sales over the past two years as an obstacle, 19 percent cited a high level of outstanding business or personal debt, 10 percent cited a less than stellar credit score, and 112 firms (32 percent) report no recent obstacles to credit. Perhaps not surprisingly, outside of the troubled construction and real estate industries, close to half the firms polled (46 percent) do not believe there are any obstacles while only 9 percent report unwillingness on the part of banks.

This fits with comments from the National Federation of Independent Businesses that cited "poor sales" as the number one problem for small businesses.