In the 12 months through June, a steady erosion of the smallest banks' position in small-business lending stopped.

Historically, a major force in market share trends has been consolidation, with larger banks absorbing business formerly handled by smaller rivals.

But another important factor has been the impact of small-business credit cards, and the dramatic pullback in credit card lending that began over a year ago may have helped arrest the slide in the share of small-business loans held by the smallest banks.

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Without access to capital markets, small businesses depend heavily on banks for financing in general. It is often up to local loan officers to assess creditworthiness at enterprises for which public information is not available.

But a collection of research published by the Small Business Administration in July attributed a quadrupling of the number of small-business loans of less than $100,000 since 1995, to almost 22 million in 2007 to growth in small-business credit cards offered by a few large issuers.

Since mid-2003, banks with balance sheets of $2 billion or less lost the greatest amount of small-business loan share between June 2006 and June 2007. During those 12 months small-business loans with original balances of $100,000 or less jumped 9.6% industrywide, to $159.6 billion, while such loans held by the small-bank group fell 9.9%, to $55.6 billion.

In the year through June 2009, such loans slipped another 9.4% among the small-bank group, to $49.2 billion, but they also contracted across the industry: by 5.5%, to $160.9 billion.

Meanwhile, loans with original balances of $250,000 to $1 million held by the small-bank group rose 0.5%, to $181 billion, while industrywide such loans fell 0.8%, to $412.1 billion.

Within a wider spectrum of banks with assets of $10 billion or less, the trend in small-business loans with original balances of $100,000 or less has been similar to the small-bank group. But, unlike the small-bank group, loans in the $250,000 to $1 million range at banks with assets of $10 billion or less fell 1.2% in the year through June, to $240.1 billion.

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