business lending

The numbers back up what small business owners have been saying for two years: Main Street suffered a brutal credit crunch.

In a speech last week, Federal Reserve chairman Ben Bernanke said banks across the country are systematically denying loan requests from financially credible small businesses.

Bernanke implored community banks to lend more to small businesses, saying they are "crucial to America's recovery."

Stimulus money helped revive the government's small business lending program after the recession threw it into a near freeze.

But this quarter, as the bonus funds ran out, the program's growth again began to stall.

Several top administration officials, including Treasury Secretary Tim Geithner and Small Business Administration head Karen Mills, will meet Wednesday with bankers, policy makers and business owners to discuss the grim state of small business lending.

Small business lending has been in freefall since the recession began. Concerned about the obstacles that places in the way of economic recovery, President Obama recently proposed a new federal effort to give community banks access to ultra-cheap government loans, which they can then use to expand their local business lending.

The agencies said they would extend their joint program to finance consumer and business lending for up to six more months.

Despite emergency stimulus measures, small business lending continues to fall. In the just-ended quarter, the Small Business Administration's flagship program backed 30% fewer loans than it did a year ago, and 55% fewer loans than it did in 2007, before the recession set in.