Small-business bank lending is soaring, according to a Small Business Administration study - especially at the low end of the scale.
"Banks are making it very easy to get credit," said Jere Glover, the agency's chief counsel for advocacy.
"I'd much rather make 10 small loans than one big one," said Marilyn Dahl, manager of small-business banking in Minneapolis-St. Paul for Norwest Corp.
In the year ended last June 30 - the latest period for which call-report data are available - the number of small-business bank loans with outstandings of less than $1 million jumped 23.6%, the SBA found.
The jump was slightly higher, 25%, for the subclass of under $250,000, and higher still - 26.8% - for those under $100,000.
But total outstandings grew faster at the higher end of the scale. The rise was 5.7% for loans of up to $1 million but only 4.9% for those under $250,000 and 4.1% for those under $100,000.
The SBA provided absolute totals only for the middle category. At midyear 9,293 banks had $184 billion in 7.4 million small-business loans with less than $250,000 outstanding.
The study ranked banks and bank holding companies on a scale with four components: small-business loans versis all assets; small-business loans versus all loans; the dollar value of small- business loans, and the number of them outstanding.
Community banks ranked highest in most states, but by these criteria BB&T Corp. of Winston-Salem, N.C., led the 57 companies in the small- business lending market with $10 billion more of total assets.
San Francisco-based Wells Fargo & Co. was second, and Minneapolis-based Norwest third. American Express Co.'s Centurian Bank ranked fourth and Memphis-based Union Planters Corp. fifth.
Norwest's Ms. Dahl said demand is rising the fastest for loans of under $100,000.
They are "bite-sized pieces of risk," she said, "and you really look at the owner's credit history rather than the business."
Bankers have become more accustomed to evaluating small-business loans, and have reduced the time it takes to win credit approval from two weeks to a few hours.
These changes have spurred under-$100,000 lending, Mr. Glover said.
Banks have simplified small-business loan applications and speeded up the approval process so that both are more like those used for consumer credit cards.
In recent years banks such as Wells Fargo, Fleet Financial Group, and First Union Corp. have begun issuing one-page applications for credit lines of less than $100,000.
"Businesses are getting blanketed with letters that say, 'Sign here - you are pre-approved for a $50,000 line,'" said Marcus Angle, senior vice president and manager of business banking for SouthTrust Corp. of Birmingham, Ala. Loans tend to be larger at SouthTrust, he said, because it does not mail such offers.
According to Mike Mantle, president of BankAmerica Corp.'s Community Development Bank, the number of small commercial loans is also on the rise because more banks are using the SBA's Fastrak program.
Introduced in 1995, Fastrak lets banks use their own documents for loans under $100,000.
"It allows us to make a tremendous volume of loans we wouldn't have been able to make before," he said. "Before, people thought the paperwork was too much trouble for a $50,000 SBA loan."
