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Dodd-Frank making small business loans difficult

A law passed in 2010, Dodd-Frank, designed to reduce corporate and Wall Street fraud, has certainly been making headway toward its intended goals. However, an unintended side effect of the law has been increasing difficulty for small businesses to obtain loans from their community banks and credit unions.

By William Atkinson | Updated on October 05, 2015

A law passed in 2010, Dodd-Frank, designed to reduce corporate and Wall Street fraud, has certainly been making headway toward its intended goals. However, an unintended side effect of the law has been increasing difficulty for small businesses to obtain loans from their community banks and credit unions.

The main reasons? First, because of Dodd-Frank, there are significantly fewer community banks and credit unions in existence. Succumbing to the weight of the regulations, they have either gone out of business completely or been gobbled up by larger regional and national financial institutions. Second, the smaller community banks and credit unions that do remain have become so focused on devoting resources to complying with Dodd-Frank requirements that they have less time and resources to focus on lending to small businesses or are reducing the numbers and types of loans that they do make.

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