Credit crunch easing for U.S. small businesses.

• Position: BANKING

For too many small businesses, securing bank loans has been a near-impossible task during the recent years of economic struggle. But that tide is finally beginning to turn. A new study, conducted by Greenwich Associates, suggests that small and middle-market businesses are starting to secure loans at rates close to the pre-recessionary "normal" level, based on first-quarter 2011 results.

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That's the first time since the start of the global financial crisis that the percentage of awarded bank loans has returned to a more traditional level. The flow of bank loans to middle-market companies and small businesses had virtually dried up during the darkest days of 2008-09, and although credit conditions improved slightly in 2010, bank lending activity remained depressed, the study found.

But the March 2011 Market Pulse study conducted by the Connecticut-based management services firm revealed more positive results for smaller companies, and that borrowing is becoming more plentiful.

"By the first quarter of 2011, loan demand and actual borrowing activity among small businesses and all middle market companies is recovering actively--and conditions now appear to be reverting back to something resembling pre-crisis norms," said Don Raftery, a Greenwich Associates consultant.

About 60 percent of small businesses participants in the study have applied for credit in the past 12 months. Of that number, about 60 percent were approved. In the middle-market company category, about 64 percent applied for credit in the past year, with approximately 70 percent of applicants being approved for loans.

"Both loan demand and application approval rates are always higher among middle market companies, which are better established and generally rank as much stronger candidates than small businesses," said Greenwich Associates consultant Pete Garrison.

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